The opinion of the court was delivered by: (Magistrate Judge Carlson)
I. Statement of Facts and of the Case
This is a breach of contract action brought by the Plaintiff arising out of a longstanding commercial lease arrangement at a property in York County, Pennsylvania. The Plaintiff, the Henrik Klinge Retained Trust (hereafter "Klinge"), alleges a straightforward breach of this lease agreement in its complaint, asserting that the parties entered into a lease in September of 1990, and that Triumph breached the lease by vacating the premises without notice in August 2009, after accruing several months' delinquencies of rent payments.(Doc. 1.)
For its part, the defendant Triumph Apparel Corporation (hereafter "Triumph") has filed an amended answer to this complaint, which disputes these allegations of breach of contract and asserts a counterclaim of unjust enrichment against Klinge. (Doc. 11.) This unjust enrichment counterclaim is premised upon an assertion by Triumph that it paid a "security deposit" of $93,132.00 on this lease at the time that it entered into the lease agreement on September 12, 1990. (Doc. 111, ¶26.) Asserting that Klinge has retained this security deposit for the past twenty years, Triumph alleges this unjust enrichment on Klinge's part as a counterclaim in this contract action.
As the parties prepare for the trial of this case, Klinge has now filed a motion in limine which seeks to preclude Triumph from presenting evidence in support of this security deposit counterclaim. (Doc. 18.) That motion has been fully briefed by the parties, (Docs. 19, 26, and 27), and this briefing reveals a certain enigmatic quality to this security deposit counterclaim, one in which both parties appear to struggle to attach current meaning to a decades-old transaction.
According to the parties' briefs, on or about September 12, 1990, a corporate predecessor of Triumph sold the real estate at issue here to Henrik Klinge, who placed the real estate in the Henrik Klinge Retained Trust. It appears that the parties then simultaneously entered into a lease agreement which allowed Triumph's corporate antecedent to lease the property back from Klinge.
The written lease agreement is silent with respect to any security deposits paid by Triumph to Klinge. However, the settlement sheet on these transactions reflects a single, enigmatic entry showing the following deposit: "3 month rent deposit." No further explanation for this "deposit" is found on the settlement sheet, and our review of the contemporaneous lease agreement sheds no further light on the meaning of this "deposit."
Moreover, it appears that the parties little noted, nor long remembered, this aspect of their 1990 transaction until it was alleged in 2009 that the lease had been breached. Faced with an alleged breach in 2009, Triumph now characterizes the "deposit" as a "security deposit", which its records reveal has not been repaid. Klinge, in turn, characterizes the payment as a three month rent advance, and urges the court to exclude any testimony regarding this security deposit from the trial of this case.
Given the fact that the actual transaction occurred more than twenty years ago, it is hardly surprising that both parties advance their competing views of the meaning of this single entry on the settlement sheet in somewhat speculative fashions. For its part, Triumph notes the entry, characterizes the deposit as a security deposit and asserts that it was never repaid this deposit. However, Triumph does not appear to present any direct testimony from a witness with personal knowledge of the September 1990 transaction who can state that the deposit was, in fact, a security deposit. In contrast, Klinge insists that the deposit was merely an advance payment of rent, but presents no witness with personal knowledge of the September 1990 transaction who can support its description of this payment. On the basis of these competing, and speculative, views regarding the meaning of these decades-old events, Klinge seeks an in limine ruling precluding any of this proof at trial.
For the reasons set forth below, we will adopt a middle course. We will deny Klinge's motion in limine, without prejudice, but place Triumph on notice that it must at trial present an offer of proof regarding what competent evidence it intends to present in support of its characterization of this payment, before it can proceed with this proof.
Klinge's motion in limine, and Triumph's response to that motion, both call upon the Court to delve into the past and ascribe meaning to a single phrase in a 21-year old real settlement sheet. This task, in turn, entails evidentiary questions regarding both the relevance and competence of this evidence, questions which we are often cautioned to avoid addressing in a vacuum.
At the outset, this motion presents an issue of relevance. Rule 401 of the Federal Rules of Evidence defines relevant evidence and provides that:
"Relevant evidence" means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less ...