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Miranda v. U.S. Security Associates, Inc.

United States District Court, N.D. California, San Jose Division

July 8, 2019

DANIEL MIRANDA, et al., Plaintiffs,
v.
U.S. SECURITY ASSOCIATES, INC., Defendant.

          ORDER RE: MOTIONS IN LIMINE RE: DKT. NOS. 86, 87, 88, 90, 91, 92

          LUCY H. KOH UNITED STATES DISTRICT JUDGE.

         Before the Court are the motions in limine of Plaintiffs, ECF Nos. 86, 87, 88; and the motions in limine of Defendants, ECF No. 90, 91, 92. After reviewing the parties' briefing, the case law, and the record in this case, and balancing the considerations set forth in Federal Rule of Evidence 403, the Court rules as follows:

         Plaintiff's Motions in Limine (“MIL”)

         MIL # 1: Plaintiffs seek to exclude all evidence and testimony by Defendant U.S. Security Associates, Inc.'s (“USSA” or “Defendant”) accounting expert, Daniel Korczyk, regarding the intention of the parties. ECF No. 86. Defendant does not oppose. ECF No. 95.

         RULING: GRANTED. Specifically, the Court rules as follows.

         Fed. R. Evid. 702 allows an expert witness to testify to “the expert's scientific, technical, or other specialized knowledge” if such expert testimony will assist the jury in understanding evidence or determining a fact in issue. However, courts “routinely exclude as impermissible expert testimony as to intent, motive, or state of mind.” Siring v. Oregon State Bd. of Higher Educ. ex rel. Eastern Oregon Univ., 927 F.Supp.2d 1069, 1077 (D. Ore. 2013); see also Barten v. State Farm Mut. Auto. Ins. Co., 2015 WL 11111309, at *3 (D. Ariz. Apr. 8, 2015) (prohibiting an expert from testifying “as to common sense[ and] state of mind”); Hill v. Novartis Pharms. Corp., 2012 WL 5451816, at *2 (E.D. Cal. Nov. 7, 2012) (“The Court finds this and other testimony regarding Defendant's intent, motives, or state of mind to be impermissible and outside the scope of expert testimony.”); Johnson v. Wyeth LLC, 2012 WL 1204081, at *3 (D. Ariz. Apr. 11, 2012) (precluding plaintiff's experts from offering “opinions concerning defendants' motive, intent, knowledge, or other state of mind”); United States v. Vaughn, 2008 WL 152135, at *1 (E.D. Cal. Jan. 16, 2008) (excluding “expert opinion of Defendant's knowledge or intent.”).

         Indeed, Defendant states that it “will stipulate that Mr. Korczyk is not being offered to opine” on the issue of “the Parties' intent.” ECF No. 95 at 1. Moreover, even Korczyk acknowledges in his deposition testimony that it is not his place to opine on the intention of the parties:

A. [I]t sounds like to me [that] you're asking me “was it your intent, Dan, Dan Korczyk, to prove that the parties intended to use $125, 000 as an expense in calculating EBITDA [(earnings before interest, tax, depreciation, and amortization)[ for purposes of earn-out?” And my answer to that would be no. It was never my intent to try to prove that.

ECF No. 86-2, 197:7-12.

         Plaintiffs also argue that “Korczyk's opinion is also based on incomplete evidence” because Miranda's deposition transcript was not available at the time Korczyk wrote his expert report, so Korczyk relied upon Defendant's attorney's representations to determine Miranda's intent. ECF No. 86 at 2. As the Court already explained above and as to which Defendant has stipulated, Korczyk will not testify as to the parties' intent. Thus, it is of no import that Plaintiffs believe Korczyk's opinions as to the parties' intent were based on the representations of Defendant's attorney.

         Thus, the Court GRANTS Plaintiffs' request to exclude all evidence and testimony by Defendant's accounting expert, Daniel Korczyk, regarding the intention of the parties.

         MIL # 2: Plaintiffs seek to exclude all evidence contradicting the Court's findings at summary judgment that (a) Defendant deducted $125, 000 from Landmark's EBITDA in an attempt to follow Landmark's historical reporting practices, and (b) the $125, 000 deduction was not in compliance with Landmark's historical reporting practices. ECF No. 87 at 1-2. Defendant opposes. ECF No. 96.

         RULING: GRANTED. Specifically, the Court rules as follows.

         First, the Court addresses Plaintiffs' contention that USSA deducted Miranda's historical $125, 000 salary from Landmark's EBITDA in an attempt to follow Landmark's historical reporting practices. Second, the Court addresses whether the $125, 000 deduction was not in compliance with Landmark's historical reporting practices.

         1. Whether Defendant Deducted $125, 000 from Landmark's EBITDA in an Attempt to Follow Landmark's Historical Reporting Practices

         First, in the Court's May 2, 2019 Order denying USSA's motion for summary judgment, the Court stated:

[John] Harford testified that under the [Asset Purchase Agreement (“APA”)], to calculate branch 224's EBITDA, USSA intended to rely upon a “normalized” profit and loss statement that would mimic how Miranda accounted for his business while Miranda was still in charge of Landmark. Thus, USSA intended to rely on the historical reporting practices of the seller, Landmark and Miranda, instead of the buyer, USSA, contrary to the language of the APA.
USSA then burdened this profit and loss statement with the $125, 000 Miranda was paying himself when Miranda owned Landmark in lieu of burdening the normalized profit and loss statement with USSA's corporate overhead. This was not a historical reporting policy of Landmark or Miranda.

ECF No. 79 at 11 (“May 2, 2019 Order”) (emphasis added) (internal citations omitted). In essence, the Court's May 2, 2019 Order concluded, based on the evidence at summary judgment, that Defendant intended to use the sellers' (Miranda and Landmark) historical reporting practices to calculate EBITDA. Indeed, John Harford, Defendant's chief development officer, confirmed that Defendant calculated EBITDA in accordance with sellers' historical reporting practices to give Miranda “‘confidence that we had an apples-to-apples comparison as we looked at out-year performance relative to how [Miranda] managed the business from an accounting standpoint' prior to Landmark's sale.” Id. (quoting ECF No. 68-2, Ex. 1 at 67:20-24).

         Defendant's reliance on the historical reporting practices of Miranda and Landmark to calculate EBITDA is at odds with the APA, which states that EBITDA is “determined in accordance with [Defendant's] historical reporting policies.” ECF No. 70, Ex. 2 at 1. The Court's May 2, 2019 Order unequivocally held that “despite the APA's language requiring the EBITDA to be calculated in accordance with USSA's historical reporting practices, USSA asserts it calculated the 2017 EBITDA according to Landmark's historical reporting practices.” ECF No. 79 at 18. Thus, the Court has conclusively determined at summary judgment that Defendant deducted $125, 000 from Landmark's EBITDA in an attempt to follow Landmark's historical reporting practices.

         Courts have granted motions in limine to exclude testimony on issues “already . . . ruled on” at summary judgment. Galen v. Avenue of the Stars Assocs., LLC, 2011 WL 837785, at *2 (C.D. Cal. Mar. 1, 2011); see also Magadia v. Wal-Mart Assocs., Inc., 2018 WL 6003376, at *2 (N.D. Cal. Nov. 15, 2018) (granting motion in limine because “the Court has already ruled on these matters in its summary judgment orders, ” thus “testimony on these issues would have no probative value, and would merely waste time”); Bob Barker Co. v. Ferguson Safety Prods., Inc., 2007 WL 4554012, at *1 (N.D. Cal. Dec. 4, 2007) (granting motion in limine “to disregard evidence probative of breach as it relates to issues already decided on summary judgment”); Mag Instrument, Inc. v. Dollar Tree Stores Inc., 2005 WL 5957825, at *1 (C.D. Cal. Apr. 14, 2005) (granting motion in limine to preclude an affirmative defense because “this issue has already been decided . . . at the time of summary judgment on the affirmative defenses”). As discussed above, the Court's May 2, 2019 Order explicitly stated that Defendant deducted Miranda's historical salary from Landmark's EBITDA in an attempt to follow Landmark's historical reporting practices. Allowing Defendant to relitigate the issue at trial “would have no probative value, and would merely waste time.” Magadia, 2018 WL 6003376, at *2.

         Defendant argues that the Court's May 2, 2019 Order held that the APA is ambiguous, thus parole evidence is admissible to ascertain the parties' intent. ECF No. 79 at 9. Defendant then cites parole evidence concerning the parties' intent regarding how to calculate the EBITDA. Defendant's arguments and citations to parole evidence are a transparent attempt to relitigate issues already decided at summary judgment. A motion in limine is not an opportunity to relitigate a summary judgment order. Dominguez v. City of Los Angeles, 2018 WL 6164278, at *11 (C.D. Cal. Oct. 9, 2018); see also Atencio v. TuneCore, Inc., 2018 WL 6265073, at *5 (C.D. Cal. Nov. 13, 2018) (“The parties may not relitigate the summary judgment motion using motions in limine.”); Bakst v. Cmty. Mem'l Health Sys., Inc., 2011 WL 13214315, at *3 n.31 (C.D. Cal. Mar. 7, 2011) (stating in a motion in ...


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