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#2216 signed 5-14-96



In Re:



NO. 91-42654-7







ADV. NO. 93-7200



This proceeding is before the Court on the plaintiff-trustee's motion to strike affirmative defenses and expert witnesses. The trustee appears by counsel James S. Kreamer. The City of Topeka appears by counsel Ann L. Hoover. The Court has reviewed the relevant pleadings, and is now ready to rule.

The debtor performed certain construction work under a contract involving the City. Certain disputes arose, apparently mainly concerning curbs and gutters that were allegedly excessively chipped. At some point, the City gave the debtor two options: (1) remove and replace the unacceptable curbs and gutters at the debtor's expense, or (2) leave them and receive no payment for that portion of the work performed. The debtor chose the second option, purportedly because the City refused to allow the remaining work to continue until that dispute was resolved, but the debtor also indicated it presumed the acceptability of the curbs and gutters would be evaluated under the contract terms.

Later, in state court, a subcontractor sued the debtor and its surety for payment for work the subcontractor had provided, and the surety asserted a cross-claim against the debtor for indemnity. The claims against the debtor were stayed by its bankruptcy filing, but the subcontractor's claims against the surety were tried. The trustee contends the contract under which the debtor was performing the construction work was a "developer project," but the City contends the state court determined in the subcontractor-surety trial that it was not. The City argues the trustee is bound by that determination through issue preclusion (or collateral estoppel), and the trustee disagrees.

On behalf of the debtor's bankruptcy estate, the trustee has sued the City and the developer involved in the construction project for breach of contract. In the final pretrial order submitted by the parties, the trustee objected to the City's assertion of issues concerning whether the debtor failed to mitigate its damages, whether the debtor's claims are barred by waiver and estoppel, and whether collateral estoppel applies "to some of [the debtor's] claims." The trustee has now moved to strike the defenses of "failure to mitigate and estoppel." She argues they are affirmative defenses which the City did not raise in its answer or by any amended pleading. The City responds that failure to mitigate is not an affirmative defense, and that the estoppel and mitigation defenses were well known to the trustee because the City briefed issues pertaining to them in response to the trustee's motions for partial summary judgment. The trustee also objected to the the City's inclusion on its witness list of "experts to be designated," noting that the Court had directed the parties to identify by name and subject matter any individual who would be testifying at trial, and the time allowed for this to be done has passed. In response, the City contends the trustee's experts should be required "to fully articulate their opinions" and it should be allowed to depose them before the City is required to name any expert witnesses it may wish to call at trial.

The Court agrees with the debtor that, under Kansas law, failure to mitigate damages is an affirmative defense. See Rockey v. Bacon, 205 Kan. 578, 583-84 (1970); Butler v. Westgate State Bank, 3 Kan.App.2d 403, 409-10, rev'd on other grounds 226 Kan. 581 (1979). The City has cited no authority for its assertion to the contrary. The Court has reviewed the City's responses to the trustee's two motions for partial summary judgment, and cannot find that failure to mitigate damages is mentioned in either response. Consequently, the Court concludes the trustee's motion to strike this defense from the pretrial order must be granted.

The Court is uncertain whether the trustee's motion is attacking both the collateral estoppel and the estoppel defenses which the City asserted in the pretrial order. The City clearly argued in its response to the trustee's motion for partial summary judgment on Count I of her complaint that collateral estoppel barred the trustee from litigating whether the construction work had been done as a "developer project." The Court will allow the City to assert collateral estoppel on this issue, but not on any other issues since it has not identified any. However, the Court notes the City may have trouble establishing the defense since the debtor did not participate in the state court trial, the debtor's bankruptcy stayed proceedings on claims against it, and according to the trustee, the question was not raised before the state court until after trial so no evidence on the "developer project" question was presented at trial.

The Court also cannot find that the City mentioned estoppel and waiver in its summary judgment responses. The City did assert its defense of accord and satisfaction based on the debtor's acceptance of one of the two options the City gave it for resolving the curb and gutter problem. If the City simply wishes to add a legal theory of estoppel or waiver based on the same facts as its accord and satisfaction defense, the Court will allow it to do that. However, to the extent the City may wish to assert the defenses based on some other, as yet unspecified facts, the Court will not allow it to do so.

The City has cited no authority for its apparent theory that the party not having the burden of proof is entitled to learn all it cares to about its opponent's expert witnesses before being required to designate its own experts. Even assuming that procedure would ever be appropriate, it is hardly reasonable to raise this argument at the end of April in a case where trial is set for early July. Rather than preclude the City from presenting any expert witnesses, however, the Court will instead give the City until May 24, 1996, to name any individuals it intends to call as experts at trial. If the City should fail to do so, it will not be allowed to present its own expert witnesses at trial.

For these reasons, the trustee's motion to strike is granted in part and denied in part, as detailed above.


Dated at Topeka, Kansas, this _____ day of May, 1996.





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