The Motion in Limine in Bankruptcy Litigation
Traditional Purpose of Motion
The term "in limine" has been defined as "[on] or at the threshold; at the very beginning; preliminarily."2 The U.S. Supreme Court in Luce v. United States wrote that "[a]lthough the Federal Rules of Evidence do not explicitly authorize in limine rulings, the practice has developed pursuant to the district court's inherent authority to manage the course of trials," citing Fed. R. Evid. 103(c) and Fed Crim. Proc. 12(e).3 The Court in Luce used the term "in limine" to refer to any motion, whether made before or during trial, to exclude anticipated prejudicial evidence before the evidence is actually offered. When evidence is offered at trial a party must object or they do not preserve the issue on appeal.4 This is because the motion in limine and the ruling itself is not the final word on the subject, as the ruling could change as the case unfolds.5
Motions in limine in bankruptcy cases have been used in a variety of ways: (a) to challenge expert testimony, (b) to exclude evidence on various grounds, (c) to exclude evidence as a sanction remedy, (d) to eliminate substantive remedies, (e) to request essential rulings and (f) to request other kinds of relief.
In Daubert v Merrell Dow Pharmaceuticals Inc.,6 the U.S. Supreme Court held that when expert testimony is proffered, the trial court is to establish under Federal Rule 702 whether the evidence has "a reliable foundation and is relevant to the task at hand."7 The trial court's duty under Federal Rule of Evidence 104(a) is to determine "whether the reasoning or methodology underlying the testimony is scientifically valid and whether that reasoning or methodology properly can be applied to the facts in issue."8 In Kumbo Tire Co. Ltd. v. Carmichael,9 the Court applied the Daubert standard to all expert witness testimony.10 Litigation counsel should expect a Daubert challenge in bankruptcy practice if they intend to offer expert testimony.
Expert testimony was found to be proper under Daubert in Roberds Inc. v. Broyhill Furniture (In re Roberds Inc.),11 a preference case where the expert was attacked as to his qualifications to testify under the "objective prong" of §547(c)(2)(C). Expert testimony was also proper in Dalen v. Chang (In re Joy Recovery Tech Corp.)12 under a Daubert challenge that solvency testimony contained improper legal conclusions, lacked credibility because the witness was a de facto contingent witness, and that the testimony was "not consistent" with business valuation techniques employed by professionals in his field.
However, in Henderson v. Andrews (In re Perry County Foods Inc.),13 the expert and his report did not survive the Daubert challenge in a fraudulent-transfer case. The court found that the expert's use of "indirect evidence" to arrive at a "consumption theory" and "ascribed value theory" was irrelevant due to the fact that the indirect evidence contained spurious generalizations that were empirically unsound because they relied on unreliable bookkeeping.14
The exclusion of a report based on Daubert may not be the end of the litigation. In Henderson, the court gave the trustee time to produce other evidence or a summary judgment would be granted. Courts have deferred ruling on Daubert motions until after hearing the testimony.15 If a Daubert motion in limine is sustained, other evidence is not available and the case depends on expert testimony, then a motion in limine can effectively adjudicate the outcome of the entire trial.
Efforts to prohibit expert testimony on the grounds of relevancy can be more difficult as courts have considered that expert testimony should be freely given.16
Case law is full of examples of motions in limine being successfully argued to preclude the introduction of evidence as being improper due to various reasons, such as (1) privilege,17 (2) settlement discussions,18 (3) proof of inadmissible character evidence,19 (4) pleadings in court regarding estimated future claims,20 (5) extrinsic evidence of unambiguous document,21 (6) use of depositions from another proceeding,22 (7) use of a transcript from a prior proceeding,23 (8) exclusion of expert testimony on divorce law,24 (9) limiting the use of hearsay evidence,25 (10) affidavits,26 (11) exculpatory clauses contained in service orders and work tickets,27 (12) new damage theories,28 (13) evidence of state of mind of a civil contemnor29 and (14) limiting evidence and arguments under §523(a)(7) because no facts had been pled to warrant consideration.30
As Remedy for Sanction
The motion is frequently used as a remedy to exclude evidence because of discovery violations or other procedural errors. It seems much more professional to request the court to limit the use of evidence by pre-trial ruling rather than moving for sanctions against your opponent. Excluded evidence has been due to (1) failing to properly plead affirmative defenses,31 (2) failure to respond to discovery requests,32 (3) failure to comply with a court order,33 (4) striking an amended complaint,34 (5) exhibits not produced until after discovery was completed,35 (6) expert testimony failure to produce an expert report under Fed. R. Civ. P. 26(a)(2)(B),36 (7) failing to file findings of fact and conclusions of law,37 (8) unanswered deposition questions,38 (9) valuation testimony39 and (10) objecting to admission of appraisal report without expert testimony.40 It also must be noted that in Grochocinski v Allstate Ins. Co.,41 the court granted sanctions of $371.25 under Fed. R. Bank. P. 7016(f) and 7037(b) for preparation of a motion in limine.
To Eliminate Substantive Claims
In the case of In re Blais,42 the bankruptcy court granted the trustee's motion in limine that attached additional evidence that was necessary for the court to determine whether the debtor's pension plans qualified for exemption under Florida law and the Internal Revenue Code. By offering the motion in limine and attached documents, the court could decide the issues presented "without further evidence or argument being presented." This case shows how the motion can aid in the presentation and determination of the case.
In Cayuga Indian Nation v. Cuomo,43 the bankruptcy court granted a motion in limine that precluded a claim of ejectment from being pursued. Cayuga was an extraordinary circumstance where the Cayuga Indian Nation sought to eject tenants from lands occupied by the state of New York. The court precluded ejectment as an inappropriate legal remedy. The Cayuga case was criticized in Powe v. Chrysler Fin. Corp.,44 where the court held that a motion in limine is to deal with evidentiary issues and is not used as a way to preclude a substantive remedy.45 The court in Powe denied the use of a motion in limine to challenge the reasonableness of attorney's fees at trial. However, in the case of In re Blazo Corp.,46 the court barred the use of evidence that the court found to be of no value as a defense to a fraudulent transfer suit.47
To Request Essential Rulings
Besides using the motion to eliminate substantive claims, the motion can be used to advise the court of potential issues and to ask for a ruling prior to trial. These include (1) requests for the appropriate burdens of proof,48 (2) determining whether a party can invoke attorney-client privilege,49 (3) whether defenses such as judicial estoppel,50 discharge in bankruptcy,51 statute of limitations,52 the doctrine of D'Oench Duhme53 and collateral estoppel apply,54 and (4) to determine the proper measure of damages.55
Some interesting requests have included (1) requesting retroactive effect of substantive consolidation to extend back 90 days before the petition date in a preference case,56 (2) determining whether a claim arose post-petition and was non-dischargeable,57 (3) deciding the issue of marshalling of assets,58 (4) determining whether a creditor became a petitioning creditor in an involuntary proceeding59 and (5) determining the extent of the debtor's avoiding powers under §544(a).60 The motion has been used by agreement to expand the scope of injunctive relief filed on an emergency basis.61
Unsuccessful Attempted Uses of the Motion
Counsel should be discriminate in the use of the motion; they are not always granted. If you are on the receiving end of a motion in limine, you could use some of these cases in your favor because, as noted earlier, some of these arguments have been successful. This shows how the decision on a motion in limine depends on the facts of the case. These include (1) motion to limit damages at trial,62 (2) striking an exhibit,63 (3) precluding the admission of invocation of the Fifth Amendment privilege for the purpose of drawing adverse inferences,64 (4) excluding evidence of emotional distress caused by violation of the automatic stay,65 (5) allowing extrinsic evidence of mailing,66 (6) barring evidence of mailing without corroborating evidence,67 (7) excluding use of settlement letters for another purpose under Fed. R. Evid. 408,68 (8) excluding evidence based on an alleged oral agreement when the parol evidence rule did not apply,69 (9) determining whether agreements were ambiguous,70 (10) excluding introduction of evidence of a pre-petition claim that varies from the schedule amount,71 (11) excluding evidence of physical and emotional abuse by husband in a dischargeability case,72 (12) barring evidence of aircraft lease rates other than that contained in the lease agreement,73 (13) precluding deposition testimony74 and (14) certifying a question of law to a state supreme court.75
Questioning the Use of the Motion
Some courts have questioned the use of a motion in limine when it was being used to obtain relief when other more appropriate procedures were available. Some examples include the motion being used as (1) a motion to dismiss,76 (2) a motion for reconsideration or motion to strike,77 (3) a motion to reconsider a summary judgment ruling,78 (4) to quash a Rule 2004 examination79 and (5) to disqualify counsel by oral motion made in chambers.80 Finally, one court refused to grant attorney's fees to the creditors' committee for preparing the motion in limine, finding that it was not granted and provided no benefit to the estate.81
The motion in limine is an effective way to position the court to rule on essential issues, to eliminate certain evidence and sometimes substantive claims or defenses, and to raise important questions to the court. It can frame the presentation of the case or in some instances adjudicate the case entirely. It should be considered an integral part of a litigant's arsenal in bankruptcy litigation.
1 Perry Cockerell is a partner with the firm of Cantey & Hanger L.L.P. in Dallas. The author wishes to thank R. Douglas Scott (associate, Cantey & Hanger L.L.P.) for his research assistance. Return to article
4 Peerless Corp. v. United States, 185 F. 3d 922, 925 (8th Cir. 1999) (evidence offered at trial without objection after motion in limine overruled, error is not preserved); Fenner, G. Michael, "The Forced Use of Inadmissible Hearsay in Bankruptcy Court," 8 Am. Bankr. Inst. L. Rev. 453 (2000). Return to article
15 See In re Pacific Gas & Electric Co., 295 B.R. 635 (Bankr. N.D. Cal. 2003) (PG&E filed a motion in limine to exclude testimony of a damages expert under Daubert. The court deferred the ruling until after hearing the testimony because the matter was a non-jury trial). Return to article
17 In re Spring Ford Industries, 2004 Bankr. LEXIS 788 (Bankr. E.D. Pa. May 20, 2004) (motion granted to preclude creditor from introducing evidence of or reference to privileged e-mails). Return to article
28 In re Landmark Distributors Inc., 189 B.R. 290 (Bankr. D. N.J. 1995) (to preclude evidence of a new damage theory termed "cash shortfall" when compensatory damages would make the alleged debtor whole in dismissal of chapter 7 involuntary case.). Return to article
35 Mishkin v. Ensminger (In re Adle, Coleman Clearing Corp.), 1998 Bankr. LEXIS 404 (Bankr. S.D.N.Y. 1998) (customers did not have a fair opportunity to meet the evidence contained in the exhibits as required by Fed. R. Evid. 807). Return to article
36 Connolly v. NEC Am. Inc. (In re Tess Communs. Inc.), 291 B.R. 535 (Bankr. D. Colo. 2003) (court noted there is no requirement for an expert to produce a report if the expert's knowledge is based on personal knowledge as actors or viewers of the facts of a particular case). Return to article
37 Grochocinski v. Allstate Ins. Co. (In re Lyckberg), 310 B.R. 881 (Bankr. N.D. Ill. 2004) (court granted sanctions of $371.25 under Fed.R. Bankr. P. 7016(f) and 7037(b) for preparation of motion in limine). Return to article
48 In re Armstrong, 238 B.R. 438 (Bankr. E.D. Ark. 1999); Bakst v. United States (In re Katz), 168 B.R. 781 (Bankr. S.D. Fla 1994); Lewis v. United States, IRS (In re Lewis), 151 B.R. 140 (Bankr. W.D. Tenn. 1992). Return to article
54 In re Tripodi, 313 B.R. 358 (Bankr. D. Conn. 2004); Ormond Beach Assoc. Ltd. Pshp. v. Citation Mortg. (In re Ormond Beach Associates Limited Partnership), 204 B.R. 336 (Bankr. D. Conn. 1996). Return to article
66 In re Beautiful Plants by Charlie, 1996 Bankr. LEXIS 349 (Bankr. M.D. Fla. 1996) (while the debtor's motion in limine was overruled, in essence it was a grant of exclusion of the evidence). Return to article
69 LTV Steel Co. v. Ferrous Metal Processing Co. (In re LTV Steel Co.), 297 B.R. 509 (Bankr. N.D. Ohio 2003) (court overruled because the oral statements were made after written agreement and the parol evidence did not apply). Return to article
76 In re Granite Partners I, 1997 Bankr. LEXIS 2219 (Bankr. E.D. Pa. 1997); Matterhorn Group Inc. v. SMH (U.S.) Inc. (In re The Matterhorn Group Inc.), 2002 Bank, LEXIS 1275 (Bankr. S.D.N.Y. 2002); In re Glenn, 108 B.R. 70 (Bankr. W.D. Pa. 1989). Return to article
78 Krommenhoek v. Natural Resources Recovery (In re Treasure Valley Opportunities Inc.), 166 B.R. 701 (Bankr. D. Idaho 1994); Matterhorn Group Inc. v. SMH (U.S.) Inc. (In re The Matterhorn Group Inc.), 2002 Bankr. LEXIS 1275 (Bankr. S.D.N.Y. 2002). Return to article