BDG Gotham Residential, LLC v. Western Waterproofing Company, Inc.

Background

BDG Gotham Residential, LLC owned the property involved in a June 2018 construction accident, and ZDG, LLC was the construction manager. ZDG had subcontracted with Western Waterproofing Company, Inc., doing business as Western Specialty Contractors, to install a curtainwall facade. A crane used by Western tipped over while lifting a facade panel, damaging property and injuring two Western employees.

After the accident, the New York County District Attorney’s Office entered into a deferred prosecution agreement with Western. Under that agreement, Western acknowledged and accepted responsibility for the conduct of two employees concerning the use of an untethered and overloaded mini crane by an uncertified operator. The agreement also said Western could not make statements contradicting the attached Statement of Facts.

Gotham and ZDG later sued Western and Western Surety Company for breach of contract, negligence, and gross negligence, seeking more than $37 million. Western filed a motion in limine, which is a request to decide before trial whether evidence may be used, asking the court to exclude the relevant portions of the agreement and Statement of Facts.

Court’s Rulings on the Deferred Prosecution Agreement

The court ruled that the first sentence of paragraph 4 of the agreement was admissible as an opposing-party admission under Federal Rule of Evidence 801(d)(2). That sentence stated that Western acknowledged and accepted responsibility for the conduct of its former senior branch manager and curtainwall superintendent in connection with the crane’s use.

The court rejected Western’s argument that Federal Rule of Evidence 408 barred the statement as part of a settlement. The court explained that Rule 408 concerns settlement of civil claims, while a deferred prosecution agreement addresses a potential criminal prosecution. The court also found the statement relevant to Gotham and ZDG’s claims and concluded that it was not unfairly prejudicial under Rule 403 when presented separately from the criminal context.

The court therefore allowed the responsibility statement to be used without referring to the agreement, the criminal investigation, or the possibility of criminal prosecution. The jury would be told only that Western acknowledged and accepted responsibility for its employees’ actions.

Court’s Rulings on the Statement of Facts

The court made these specific rulings:

- Paragraphs 1, 5, 6, 9, and 15 were admitted by agreement. - Paragraphs 2 and 4 were admitted exactly as they appeared in the original Statement of Facts; the court rejected Western’s proposed wording changes. - Paragraph 3 was admitted, including the names of the two injured ironworkers, because the court found that including their names was not unfairly prejudicial. - Paragraph 10 was admitted without objection, with an added sentence referring to the subject email and with that email attached as an exhibit. - Paragraph 13 was not stricken. The court ruled that statements by Western employees about the required permit were admissible against Western as statements by employees concerning matters within the scope of their employment.

The court separately addressed paragraphs 7, 8, 11, 12, 14, and 16, which began by stating what the district attorney’s investigation had determined or revealed. The court ruled that Western had admitted only that the district attorney’s investigation made those findings. Western had not admitted the truth of the findings themselves. The findings could be used only if they were proved at trial.

The court added that, if the findings were proved, Western’s responsibility for the conduct of its employees would make Western liable for their actions, and the jury would be instructed accordingly.

Disposition

The court’s decision states that Western’s motion in limine was granted in part and denied in part. The parties were directed to consult with Judge Moses about an appropriately worded stipulation. The clerk was directed to remove the motion from the list of open motions.

Judge-name note

The opinion text identifies the issuing judge only as “McMahon, J.” and refers to Judge Moses as the judge with whom the parties should consult. The supplied case information identifies Barbara Moses as the judge, creating a discrepancy that should be reviewed.