The court in AECOM v. Flatiron is back at it issuing additional evidentiary rulings as the parties head to trial later this month. These latest rulings highlight the risk of seeking the same damages from multiple parties, sometimes referred to as “fighting on two fronts.” As you may recall, AECOM v. Flatiron involves claims by the general contractor, FlatIron, against the designer, AECOM, for cost overruns totaling $263 million on a Colorado DOT project. At trial, AECOM intends to introduce evidence that Flatiron sought to recover from other parties for at least some of those same cost overruns. This includes a “Special Request for Equitable Adjustment” that Flatiron submitted to CDOT, as well as claims made by Flatiron against various subcontractors. In connection with those other claims, Flatiron purportedly blamed parties other than AECOM for causing project delays and sought amounts that are inconsistent with Flatiron’s damage claim against AECOM.
Flatiron moved to exclude evidence of these other claims on various grounds, including Rules 401 (relevance), 403 (unfair prejudice), 404 (character evidence), and 408 (settlement discussions). The court rejected each of those arguments, reasoning that such evidence is both relevant and persuasive. For example, with respect to the claims against other subcontractors, the court concluded that such evidence “is relevant to show that although Flatiron has alleged that AECOM is responsible for nearly all of the Project’s cost overruns, Flatiron has also had disputes with several subcontractors who worked on the Project. AECOM’s argument that Flatiron sued the other subcontractors for far more than the $1.5 million difference in overruns it otherwise wholly attributes to AECOM is persuasive [and] relevant to AECOM’s defense that Flatiron has overreached in its causation and subsequent damages analysis.” The court’s decision highlights an issue that contractors often face when dealing with disputes from upstream and downstream parties on the same project. If you choose to fight on multiple fronts by pursuing claims against multiple parties, you run the risk that someone will argue and be allowed to introduce evidence of the related disputes, which may be inconsistent with or damaging to your position in the current litigation. This has obvious implications to a trial, whether to a judge, a jury, or arbitration panel. It also should serve as a reminder to a project participant that it should choose its targets carefully in project correspondence and should be careful in how it words a letter, whether a claim notice or a response to a routine job change order request.