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Recent decision on improper use of in limine motions
Amtower v. Photon Dynamics, Inc. (January 17, 2008) |
The decision of the Sixth Appellate District Court in Amtower v.
Photon Dynamics, Inc. (January 17, 2008) 07 C.D.O.S. 825, has gotten
quite a bit of press. In Amtower, the appellate court chastised
trial courts and trial attorneys for what it perceived as an
increase in the use of in limine motions to dispose of part or all
of a case rather than using dispositive motions authorized by
statute, such as motions for summary judgment or judgment on the
pleadings. However, it seems the court could have picked a better
case to use as an example of this criticized practice because here
the court of appeal affirmed the decision of the trial court to
dismiss following a “mini-trial” on defendant’s motion in limine to
exclude evidence in support of the plaintiff’s key cause of action.
The court of appeal observed, “…although we would have preferred
that the statute of limitations issue be decided by a proper summary
adjudication motion or motion for nonsuit, the trial court’s
unorthodox procedure does not warrant reversal because plaintiff
could not have prevailed under any circumstance.”
The underlying case was a dispute arising out of a corporate merger.
The plaintiff had been an officer of the company that was taken over
and claimed that certain officers and directors of the takeover
company had violated their fiduciary duties to him, concealed and
misrepresented certain facts about the transferability of stock and
violated section 11 of the Federal Securities Act of 1933. In sum,
he claimed the disclosure statement omitted reference to certain
black out periods during which he could not sell his stock for the
newly merged company and as a result, he suffered substantial
financial damages. The defendants claimed, in part, that plaintiff’s
action was barred by the statute of limitations as a matter of law
because he was aware of the omissions and misrepresentations about
the transferability of stock more than a year before he filed his
complaint.
Apparently, just days before the trial of the matter, the plaintiff
admitted in a continued session of his deposition that he had seen
and actually read the disclosure statement at issue in 1999. The
court observed the testimony showed that plaintiff must have been
aware of any deficiency in the statement in 1999 and that since the
action was not filed until April 2001, the one year statute of
limitations barred his action. The defendants raised this issue by a
motion in limine seeking to exclude evidence to support plaintiff’s
section 11 claim; in the alternative, they requested an Evidence
Code section 402 hearing or a separate trial on their statute of
limitations defense to the section 11 claim.
Rather than hold a 402 hearing or bifurcate the trial to hear the
statute of limitations defense first, the trial court decided to
take up the matter in a “mini-trial.” The court considered the
pertinent documents and the plaintiff’s testimony. Based on the
evidence presented the court ruled the plaintiff’s section 11 claim
was barred as a matter of law by the statute of limitations. The
rest of the case went to trial before a jury, and at the close of
evidence the five individual director defendants made nonsuit
motions that were granted. By special verdict, the jury found two
other defendants did not violate any duty, make any false statements
or conceal anything from plaintiff. Judgment and some attorneys fees
were awarded to defendants and plaintiff appealed.
Plaintiff claimed the procedure of using an in limine motion to
dispose of a fundamental element of his case was unfair and deprived
him of his right to a jury trial. The court considered several of
the plaintiff’s other contentions on appeal, but the issue of using
an in limine motion to dispose of a case is the one of greatest
interest.
The appellate court observed that, “strictly speaking, Photon’s
motion was not an in limine motion. In limine motions are designed
to facilitate the management of a case, generally by deciding
difficult evidentiary issues in advance of trial.” The court noted
that “nontraditional in limine motions can result in a court’s
dismissing a case on the pleadings.” In the opinion of the court,
disposing of a case through the use of an in limine motion is merely
a substitute “for the dispositive motions authorized by statute” and
is a practice about which “[a]ppellate courts are becoming
increasingly wary.”
Some of the reasons the court criticized the use of in limine
motions to dispose of a case include the fact the other side does
not have the time or ability to oppose such a motion in the same way
it would had the motion been made pursuant to a statute which
provides for a statutory notice period and time to oppose and reply
to the motion. It said the nonmoving party can be “blind sighted.”
In addition, if a ruling on such a motion is appealed, the appellate
court must review the matter as if it were reviewing the grant of a
nonsuit after opening statement, “a disfavored practice.” In such a
situation, the standard of review requires that all inferences and
conflicts in the evidence be resolved in favor of the losing party
and against the judgment, rather than a review following a trial on
the merits which favors the upholding the judgment.
However, the court’s position against using motions in limine to
dispose of cases rings hollow when it observes that “[i]n spite of
the obvious drawbacks to the use of in limine motions to dispose of
a claim, trial courts do have the inherent power to use them in this
way.” Here, the trial court made the right decision and it seems
that the appellate court is using the wrong case to make its point.
First, the testimony of the plaintiff that was key to the granting
of the in limine motion wasn’t obtained until days before the
trial—there was no time for a dispositive statutory motion. It would
seem judicial economy would favor the efforts of the defense to
dispose of as much of the trial as possible before sending the
matter to the jury, particularly when the key evidence was not even
available until just days before trial. In addition, the court
downplays the fact that defense counsel did try to bifurcate the
matter and the trial court decided to hold a “mini-trial” on the
matter, relying in great part on the testimony of the plaintiff
himself. Also, given the fact the court took evidence including
plaintiff’s testimony during this mini-trial, it seems to be a
situation more akin to the granting of a nonsuit after the close of
plaintiff’s case—plaintiff’s own testimony in a civil suit should
arguably be his best evidence. If, as a matter of law, his own
testimony defeats his case, then why go all the way through a trial
to discover that fact? Just so the court of appeal can use a
different standard of review? The appellate court noted that there
was “no evidence plaintiff could produce that would change this
result. Accordingly, there was no issue for the jury to decide and
the trial court properly dismissed the section 11 claim.” I just
don’t get why the court used this case as an example to rail against
the practice of using an in limine motion to dispose of part of all
of a case—particularly when the moving party discovered the
essential evidence just days before trial.
I think this decision sends mixed messages—trial courts have the
inherent authority to grant motions in limine and to dispose of
actions as a whole in this way, but the appellate court does not
like it because it is a “disfavored” procedure and may end up with a
greater number of reversals because on review all inferences and
conflicts must be resolved in favor of the nonmoving party. By
comparison, if the matter goes to trial, then all conflicts in the
evidence are resolved in favor of the judgment. Still, the use of in
limine motions in this way would also appear to promote judicial
economy…at least for the trial courts.
It also occurs to me that perhaps more defendants are seeking to
resolve cases substantively through the use of in limine motions
because of the extremely long notice period (75 days before trial)
for a motion for summary judgment that went into effect several
years ago. In Amtower, the defendants could not have brought such a
motion because of the late discovery of the essential evidence on
the statute of limitations issue. The court observed the use of in
limine motions to dispose of part or all of a case has been
increasing and it would be interesting to see whether there is any
correlation to the period of time the 75 day notice requirement of
CCP 437c has been in effect. |
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