United States District Court,

D. New Jersey.

Raymond J. DONOVAN, Plaintiff,

v.

DRAGADOS, S.A., Dragados Inversiones USA, S.L., and Newark Real Estate Holdings, Inc., Defendants.

 

Civil Action No. 09–409(KSH)(CW).

June 28, 2013.

 

OPINION

KATHARINE S. HAYDEN, District Judge.

 

 

I.

INTRODUCTION …………………….

1

II.

JURISDICTION …………………….

3

III.

FACTS …………………….

3

 

A.

The SPA ………………..

4

 

B.

SCC’s M/W/DBE Procurement Objectives and Obligations ……….

10

 

C.

2004 Investigation ………………..

12

 

D.

2007 Investigation ………………..

13

 

E.

2008 Search Warrants & Grand Jury Subpoenas ……….

16

 

F.

M/W/DBE Compliance Audit ……………

17

 

 

1.

Job 506 Audit Results

19

 

 

2.

Job 510 Audit Results

21

 

 

3.

Job 511 Audit Results

23

 

G.

Non–Prosecution Agreement ……………

23

 

H.

Payments Made to Donovan under the SPA ……….

27

IV.

DISCUSSION & ANALYSIS ………………..

28

 

A.

Breach of Contract ………………..

28

 

B.

Dragados Alleges Donovan Breached the SPA ……….

29

 

 

1.

SPA Sections 4.8(a) & 4.9(c)—Failure to Disclose Material Facts

30

 

 

2.

SPA Section 4.9(a)—Submitting Inaccurate M/W/DBE Reports in Violation of the Law and Maintaining Inaccurate Books & Records

34

 

C.

Dragados Alleges it is Entitled to Indemnification from Donovan for Damages Incurred in Connection with the Government’s Criminal Investigation……….

39

 

 

1.

Indemnification Under the SPA

39

 

 

2.

Reasonableness of Settlement

44

V.

CONCLUSION …………………….

46

 

 

I. INTRODUCTION

*1 Schiavone Construction Company (“SCC”) builds, among other large projects, bridges and tunnels for public entities like New York City, New York State, and the New Jersey Department of Transportation. For years, it was owned by long time partners Ronald A. Schiavone (“Schiavone”) and Raymond J. Donovan (“Donovan”). In December 2007, the partners sold SCC to a Spanish construction conglomerate made up of Dragados, S.A., Dragados Inversiones USA, S.L., and Newark Real Estate Holdings, Inc. (collectively “Dragados”) for $150,000,000. SCC continued (and continues still) to operate and to maintain its offices in Secaucus, New Jersey.

 

In February 2008, less than two months after Schiavone and Donovan transferred all their stock to Dragados under a detailed Stock Purchase Agreement (“SPA”), federal agents raided SCC’s corporate office. Over the next months Dragados responded to requests for production of documents, provided witnesses for government interviews, and ultimately, in December, 2010, entered into an agreement with the U.S. Attorney for the Eastern District of New York whereby the company would not be criminally prosecuted. The federal investigation related to certain SCC hiring practices that were in effect prior to the sale to Dragados.

 

Under the SPA, when Schiavone and Donovan fully divested themselves of their equal shares of SCC stock in December 2007, Dragados paid each of them $65,000,000, and owed each a final installment payment of $10,000,000 payable one year after the closing. After the raid, and on written notice to Schiavone and Donovan, Dragados did not make the installment payments. Nor did they remit, when they received it, tax refunds of over $800,000 owed under the SPA in equal shares to Schiavone and Donovan.

 

On January 29, 2009, Donovan filed this lawsuit for breach of contract and indemnification against Dragados. [See D.E. 19–4.] That same day, Schiavone sued Dragados under a virtually identical complaint. [D.E. 1.] On March 27, 2009, Dragados filed an answer and counterclaim in each of the actions alleging that Donovan and Schiavone materially breached representations and warranties in the SPA. [See D.E. 14.] On April 21, 2009, then-Magistrate Judge Patty Shwartz granted Dragados’s uncontested motion to consolidate Donovan v. Dragados, S.A., et al, Civil Action No. 09–411 (SRC–MAS) and Schiavone v. Dragados, S.A., et al., Civil Action No. 09–409 (KHS–PS). [D.E. 21.]

 

Discovery went forward, and the parties engaged in dispositive motion practice and brought in limine motions preparatory to a bench trial.FN1 On the first trial day, Schiavone and Dragados stipulated to the dismissal of all pending claims in consideration for an undisclosed settlement they had consummated the week before. [D.E. 239.] The bench trial between Donovan and Dragados went forward on January 29–31, 2013, February 1, 2013, and February 7, 2013. [D.E. 235, 240–242, 244.] Donovan testified on his own behalf and called Greg Vasel as a rebuttal witness. [D.E. 235; D.E. 244.] Testifying on behalf of Dragados were Paul Scagnelli, Melanie Swalm, Frederick Bunker, Lorraine D’Angelo, Mary Libassi (all SCC employees, some of whom stayed on with Dragados after the sale), and Jose Antonio Lopez (the President of Dragados). [D.E. 235, 240–244.] FN2 The parties subsequently filed post-trial written summations. [D.E. 245, 246.]

 

FN1. Under Section 12.7 of the SPA, the parties waived a jury trial.

 

FN2. By letter dated January 25, 2013, counsel for Dragados notified the Court that it learned Carl Cosenzo, a former high-ranking official at SCC who was subpoenaed to appear at trial, intended to assert his Fifth Amendment right against self-incrimination when questioned at trial. [D.E. 228.] Dragados argued that Cosenzo waived his Fifth Amendment rights by “testifying on the same topics” several times “under oath.” [Id. at 1–3.] In the alternative, Dragados sought an adverse inference against Donovan. [Id. at 1, 4] In response, Donovan opposed the drawing of an adverse inference and argued that if Cosenzo’s invocation of privilege were sustained he would seek to admit Cosenzo’s deposition testimony as evidence at trial. [D.E. 230.] Counsel for Cosenzo, Avi Moskowitz, proffered to the Court—in a letter submission and in camera at trial—a good faith basis for believing that Cosenzo’s trial testimony may be incriminating. [D.E. 238.] As such, the Court was satisfied with counsel’s good faith basis for Cosenzo’s invocation of the privilege, rejected Dragados’s request for an adverse inference, and ruled that such unavailability rendered Cosenzo’s prior deposition testimony admissible. [Tr. Day 1, 79:23–80:12; 81:14–24.] The Court requested that the parties collaborate regarding a joint redaction of the transcript that would represent a fair excerpt of the deposition testimony. [Id. 81:14–24.] The parties admitted a redacted version of Cosenzo’s April 12, 2010 deposition transcript as Joint Exhibit 1 (“JE 1”).

 

*2 Having heard the testimony of the witnesses, reviewed the exhibits, and considered the parties’ summation briefs, the Court, in accordance with Fed.R.Civ.P. 52(a), makes factual findings and conclusions of law that are set forth below.

 

II. JURISDICTION

Jurisdiction arises in this Court pursuant to 28 U.S.C. § 1332(a) in that the amount in controversy exceeds $75,000 exclusive of interest and costs and the matter is between citizens of different States.

 

III. FACTS

The core of this dispute is the very different way the parties apply the language of the SPA to the undisputed series of events that began in February 2008 with the raid by federal authorities and finally concluded in December 2010 with the consummation of Dragados’s nonprosecution agreement that included, among other things, payments to the Department of the Treasury, New York City Department of Investigation, and the MTA of approximately $22,370,000 in fines and investigative costs. [Defs.’ Exhs. 398, 403, 405, 407, 408.] Donovan reads the SPA to require Dragados to make the final $10,000,000 payment to him, remit one-half of the tax refunds, and pay him reasonable fees and costs expended in enforcing his rights under the SPA, notwithstanding the financial impact on Dragados of the federal investigation. Dragados reads the same SPA to require that Donovan reimburse it for the fines and investigative costs it paid to federal and state agencies, as well as the legal fees Dragados incurred over the years it negotiated and ultimately settled with the government and the legal fees it has incurred in this litigation. In short, each side to this lawsuit believes the other owes him/it millions of dollars in damages based on these competing interpretations of the SPA.

 

Except where specifically noted, the facts set forth in this section are not in dispute and may be deemed the Court’s findings.

 

A. The SPA

SCC is a “heavy construction company” that specializes in transportation projects including, but not limited to, building bridges, tunnels, and storage treatment plants. [Tr. Day 1, Donovan 59:10–15.] This work is performed almost exclusively for public owners such as the New Jersey Department of Transportation (“DOT”), the New York Metropolitan Transit Authority (“MTA”), and the New York City Department of Environmental Protection (“DEP”). [Tr. Day 1, Scagnelli 84:20–85:3.]

 

On December 27, 2007, represented by counsel and after negotiations, Donovan and Schiavone entered into the SPA, under which they transferred their respective 50% shares of the stock in SCC to Dragados in exchange for $75,000,000 each ($150,000,000 total). [Pl.’s Exh. 1, Defs.’ Exh. 134 (hereinafter “SPA”) § 2.2 (“The Purchase Price”); Tr. Day 1, Donovan 59:22–60:12, 61:18–21.] In accordance with Section 2.2 of the SPA, Dragados was to pay each partner in two installments: $65,000,000 within 30 days of closing and $10,000,000 plus 7% annual interest one year after closing (the “Installment Payment”). [SPA § 2.2; Tr. Day 1, Donovan 62:9–18.] Section 11.5 of the SPA further required that Dragados remit to Donovan and Schiavone, in equal shares and when received, all tax refunds or credits due to SCC for the pre-closing date period of 2007. [SPA § 11.5(a); Tr. Day 1, Donovan 62:19–23, 63:4–7.] In Section 12.17(a), Dragados “unconditionally guarantee[d]” its “full and punctual payment, performance and observance, as and when due, of all of the terms, covenants, conditions and obligations in this Agreement” including “payment of the Purchase Price and the Installment Payment.” [SPA § 12.17(a).]

 

*3 Donovan and Schiavone both made material representations and warranties in Articles IV and V of the agreement and Dragados made material representations and warranties in Article VI. [See generally SPA Arts. IV, V, and VI.] Donovan and Schiavone’s representations and warranties were “made on the basis of SCC’s Knowledge,” which is defined in the SPA as “the actual Knowledge of any of the Persons set forth in Exhibit B with respect to SCC.” [SPA Preamble to Article IV and § 1.1.] Exhibit B of the SPA identifies the following as Persons with Knowledge: (1) Raymond J. Donovan; (2) Ronald A. Schiavone; (3) Gregory M. Vasel; (4) Mary Libassi; (5) Mike Goldstein; (6) Carl Cosenzo; (7) Jim Hamill; (8) Paul Scagnelli; and (9) Frederick Bunker. [SPA Exh. B.] In short, the representations and warranties made in Articles IV and V were based on the actual knowledge of the people enumerated in Exhibit B of the SPA.

 

Relevant to the issues presented at trial, Donovan and Schiavone made the following representation/warranty:

 

Section 4.8 Litigation.

 

(a) SCC has furnished to Parent FN3 a complete list of each litigation, suit, action, claim, filed charge, arbitration, complaint or other proceeding (each, an “Action” ) that has been instituted or, to the Knowledge of SCC, threatened against, by or affecting SCC, any of its Subsidiaries, PPR FN4 or the Shareholders (solely in relation to SCC, its Subsidiaries or PPR), the outcome of which, if determined adversely to SCC, PPR or the Shareholders, would be reasonably expected to have a Material Adverse Effect. Except as set forth in Section 4.8(a) of the Disclosure Letter, (i) there is no Action by or before any Governmental Authority pending or, to the Knowledge of SCC, threatened, against, by or affecting SCC, any of its Subsidiaries, PPR or the Shareholders (solely in relation to SCC, its Subsidiaries or PPR), except for such Actions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on SCC, and (ii) no material investigation or inquiry by or before any Governmental Authority is pending or, to the Knowledge of SCC, threatened against SCC, any of its Subsidiaries, PPR or the Shareholders (solely in relation to SCC, its Subsidiaries or PPR).

 

FN3. “Parent” is defined in the introduction of the SPA as Dragados. [SPA, p. 1.]

 

FN4. “PPR” refers to 1600 P.P.R., Inc., a New Jersey Corporation that Schiavone and Donovan sold under the SPA. [SPA § 2.1.]

 

[SPA § 4.8(a).] The Disclosure Letter mentioned in Section 4.8 is a document appended to the SPA dated December 14, 2007, which contains “disclosures” that correspond to the various sections in the SPA. Of significance here, Donovan and Schiavone made the following disclosure regarding SPA § 4.8(a) (“Material Litigation/Pending or threatened against SCC” (italics in original)):

 

5. MTA Office of Inspector General: On December 2, 2004, the Schiavone/Granite Halmar Joint Venture received a subpoena from the Metropolitan Transportation Authority, Office of the Inspector General, for records related to three (3) Disadvantaged Business Enterprise subcontractors (O.J. Painting, New York Stone and Dan Yant, Inc.) performing work on the Times Square project. Records responsive to the subpoena were produced. On February 24, 2005, additional documents were requested with respect to Dan Yant, Inc. On November 9, 2006, an officer and project manager of SCC and one individual employed by Granite Halmar were subpoenaed by the MTA in a “confidential investigation.” The witnesses appeared at the hearings and gave testimony; questions were limited to Dan Yant, Inc. To date, SCC has not received any further information regarding the investigation.

 

*4 [Plf.’s Exh. 2; Defs.’ Exh. 135 (hereinafter “Disclosure Letter”) at § 4.8(a).]

 

Donovan and Schiavone represented to Dragados in Section 4.9(a) of the SPA that “SCC, each of its Subsidiaries, PPR and the Shareholders … are, and have been at all times, in compliance in all material respects with all applicable Laws. All Books and Records, including personnel files of any employee, of SCC and its Subsidiaries have been maintained, in all material respects, accurately and in accordance with applicable Law.” [SPA § 4.9(a).] “Books and Records” are defined in Section 1.1 of the SPA as “all customer lists, policy information, insurance contract forms, administrative and pricing manuals, claim records, sales records, underwriting records, financial records, compliance records, data files and other materials prepared for or filed with Government Authorities regulating the businesses of SCC and its Subsidiaries, Tax records and other books and records …” [Id. § 1.1.] “Law” is defined as: “any law (including common law), ordinance, writ, directive, judgment, order, decree, injunction, statute, treaty, rule, regulation, regulatory requirement or determination of a Governmental Authority.” [Id.]

 

Donovan and Schiavone represented to Dragados in Section 4.9(c) of the SPA, that:

 

(c) Except as set forth in Section 4.9(c) of the Disclosure Letter (i) none of SCC, any of its Subsidiaries, PPR or the Shareholders has received any written notice from any Governmental Authority that, or otherwise has any Knowledge that, (x) alleges any material noncompliance (or that SCC or any of its Subsidiaries is under investigation or the subject of an inquiry by any such Governmental Authority for such alleged noncompliance) with any applicable Law or (y) could reasonably be expected to result in a material fine, assessment or cease and desist order, or the suspension, revocation or limitation or restriction of any SCC Permit, and (ii) except for the payment of fines and penalties incurred in the ordinary course for infractions that are not material in nature or amount and for routine and customary corrective measures undertaken at Projects in response to site inspections in the ordinary course, none of SCC, any of its Subsidiaries, PPR or the Shareholders (solely in relation to SCC, its Subsidiaries or PPR) has entered into any agreement or settlement with any Governmental Authority with respect to its non-compliance with, or violation of, any applicable Law.

 

[Id. § 4.9(c).] The only disclosures in related Section 4.9(c) of the Disclosure Letter pertain to small fines incurred in the ordinary course of business, a notice related to an alleged discharge of a pollutant, and two violations stemming from a groundwater discharge. [Disclosure Letter at § 4.9(c).]

 

In the event of a breach, Section 10.1 articulates Donovan and Schiavone’s indemnification obligations while Section 10.2 articulates Dragados’s indemnification obligations. [SPA §§ 10.1, 10.2.] All parties to the SPA agreed that “[e]xcept in the case of fraud or willful misrepresentation … the indemnification provisions of [ ] Article X and Article XI FN5 shall be the exclusive monetary remedy of the Indemnified Persons with respect to breaches of representations, warranties, covenants, obligations or other provisions of this Agreement.” [Id. § 10.8.]

 

FN5. Section 11.8 provides that “[n]otwithstanding any other provision of this Agreement, this Article XI shall exclusively govern all matters related to indemnification for Taxes under this Agreement and Article X shall not apply to such matters.”

 

*5 Section 10.1(a) provides that Donovan and Schiavone must: “severally and not jointly, indemnify, defend and hold harmless Parent [Dragados], each of its Subsidiaries (including SCC and its Subsidiaries), and each of their respective directors, officers, managers and employees (and the respective heirs, successors and assigns of each of the foregoing) (the “Parent Indemnified Persons”) from and against and in respect of one hundred percent (100%) of all Parent Losses.” [Id. § 10.1(a).] “Parent Losses” are further defined in the SPA as:

 

all actual losses, liabilities, damages, judgments, settlements and expenses (including interest and penalties recovered by a Third Party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of the rights of the Parent Indemnified Persons arising under Articles X and XI) incurred by any of the Parent Indemnified Persons, whether or not involving a Third–Party claim, which are caused by, arise from or are related to: (i) any breach by [Donovan],FN6 Schiavone or SCC of any of their respective representations and warranties contained in or made by or pursuant to Article IV …

 

FN6. “Donovan” is bracketed because the SPA says “such Shareholder” and Exhibit A to the SPA notes that Donovan and Schiavone are 50/50 Shareholders. [SPA, Exh. A (“Shareholder Data”).]

 

[Id. § 1.1.] In accordance with Section 10.1(b), Donovan and Schiavone must also:

 

… severally and jointly, indemnify, defend and hold harmless the Parent Indemnified Persons from and against and in respect of one hundred percent (100%) of all actual losses, liabilities, damages, settlements and expenses (including interest and penalties recovered by a Third Party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of the rights of the Parent Indemnified Persons arising under Article X) incurred by any of the Parent Indemnified Persons, whether or not involving a Third–Party claim, which are caused by, arise from or are related to (i) any breach of any representation or warranty made by SCC, [Donovan] or Schiavone pursuant to Article IV or Article V, (ii) any covenant of [Donovan] or Schiavone contained in this Agreement …; provided, however, that, in the case of any representation or warranty that is limited by “material,” “Material Adverse Effect” or by any similar term or limitation, the occurrence of a breach or inaccuracy of such representation or warranty … and the amount of losses subject to indemnification hereunder shall be determined as if “material,” “Material Adverse Effect” or by any similar term or limitation were not included therein.

 

[SPA § 10.1(b) (underlining in original).]

 

With respect to Dragados’s obligation to indemnify Donovan and Schiavone, Section 10.2(a) provides that Dragados must:

 

… indemnify, defend and hold harmless the Shareholders and each of their respective heirs, successors and assigns (the “Shareholder Indemnified Persons”) from and against and in respect of one hundred percent (100%) of all actual losses, liabilities, damages, judgments, settlements and expenses (including interest and penalties recovered by a Third Party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of the rights of the Shareholder Indemnified Persons arising under Article X) incurred by any of the Shareholder Indemnified Persons, whether or not involving a Third–Party claim, which are caused by, arise from or are related to (i) any breach of any representation or warranty made by Parent, Buyer or Newark Holdings pursuant to Article VI or in any certificate delivered by Parent or Buyer at Closing pursuant to Section 3.3, (ii) any covenant of Parent, Buyer or Newark Holdings contained in this Agreement … (“Shareholder Losses”).

 

*6 [SPA § 10.2(a).]

 

B. SCC’s M/W/DBE Procurement Objectives and Obligations

Jobs being performed by SCC for the MTA and DEP are subject to Minority, Woman, and Disadvantaged Business Enterprise requirements (known variously as MBEs, WBEs, and DBEs, or collectively, M/W/DBEs). These programs were implemented to “benefit[ ] minorities and woman and disadvantaged business enterprises by allowing them to get work under the contracts” with companies such as SCC. [Tr. Day 5, Libassi 87:14–21.]

 

SCC is required to use M/W/DBEs on its public works contracts with the federal and state government. [Tr. Day 3, D’Angelo 53:14–21; Tr. Day 5, Libassi 87:14–21.] Indeed, the government provides funds to the relevant agency (MTA or DEP) in exchange for its compliance with the M/W/DBE requirements, which then flow down to the contractor (SCC). [Tr. Day 5, Libassi 88:23–89:18.] Thus, if there is miscounting of participation, the value of that miscounting is forfeited back up the chain. [Id.] The M/W/DBE programs are mandated by the owner of the project, i.e. the MTA or the DEP, which stipulates what the M/W/DBE participation goal will be on a particular project. [Tr. Day 1, Scagnelli 87:25–88:2; Tr. Day 2, Bunker 76:11–25.] Using a list of certified M/W/DBEs, prepared and provided by the owner or government agency contracting out the particular project, SCC solicits bids from M/W/DBE subcontractors to be included in its bid on the overall contract. [Joint Exh. 1, Deposition of Carl Cosenzo (“Cosenzo Dep.”) 10:19–11:13.] Every M/W/DBE subcontractor must serve a commercially useful function, which means that the subcontractor must be able to perform the work on its own. [Tr. Day 2, Bunker 136:8–23; Tr. Day 3, D’Angelo 56:21–22.]

 

As a prerequisite for getting the contract, SCC must submit utilization plans identifying which certified M/W/DBE subcontractors it intends to employ—the owner ultimately uses this information to determine whether to award the contract to SCC. [Tr. Day 5, Libassi 88:2–8; Tr. Day 1, Scagnelli 88:2–7.] FN7 In addition to the initial plans, and in conjunction with the M/W/DBE participation goals, SCC is required to complete periodic progress reports related to the M/W/DBEs that are working on the project to be submitted to the respective owner (MTA/DEP). [Tr. Day 1, Scagnelli 88:8–18.] These reports include information such as: the name of the subcontractor, a description of work the subcontractor was performing, and the subcontractor’s start date; the projected completion date; the total subcontractor contract amount; the percentage of work completed; and total payments made to each subcontractor to date. [Tr. Day 2, Bunker 77:20–78:14; see, e.g., Defs.’ Exh. 83 (Feb.2007 Monthly Contractor DBE Progress Report for Job 510).]

 

FN7. If SCC’s bid did not achieve the M/W/DBE participation goal set by the owner but the owner still decided to award the job to SCC, “which [did] happen,” SCC had “an obligation to continue [its] good faith effort” to see if, in fact, there were additional M/W/DBEs that could be placed on the particular project. [Cosenzo Dep. 11:14–25.]

 

The target of the federal agents’ search and seizure of records and computers in February 2008 was information about SCC’s use of certain M/W/DBEs on specific projects, Jobs 506, 510, and 511. [Tr. Day 4, Libassi 60:12–17.] For Job 506—the “Croton open cut” project—SCC contracted with the NYCDEP to dig a hole for future water treatment plants to be constructed within that excavation. [Tr. Day 1, Scagnelli 85:5–16.] For Job 510—the South Ferry Project—SCC and Granite Halmar (in a joint venture) contracted with the MTA to replace an existing subway station and construct a new subway route. [Id. 85:17–86:4.] Job 511 is the Croton water tunnel project for the DEP, in which SCC constructed a tunnel to bring water down from upstate New York and distribute it into Manhattan. [Id. 86:5–87:20.]

 

*7 With the foregoing in mind, then, the Court turns to the evidence presented on the lead-up to the federal raid on SCC’s corporate office and job site.

 

C. 2004 Investigation

In 2004, SCC was a partner in a joint venture with Granite Halmar performing work at the Times Square MTA station—Job 502. On December 2, 2004, the MTA served a subpoena on the joint venture seeking records for an investigation into work by SCC and three DBE subcontractors. [Tr. Day 4, Libassi 96:15–25.] Between December 2004 and March 2005, SCC turned over numerous documents to the MTA. [Id. 101:19–102:12.]

 

SCC noticed Dragados about the existence of the investigation, describing it in the Disclosure Letter as follows:

 

On December 2, 2004, the Schiavone/Granite Halmar Joint Venture received a subpoena from the Metropolitan Transportation Authority, Office of the Inspector General, for records related to three (3) Disadvantaged Business Enterprise subcontractors (O.J. Painting, New York Stone and Dan Yant, Inc.) performing work on the Times Square project. Records responsive to the subpoena were produced. On February 24, 2005, additional documents were requested with respect to Dan Yant, Inc. On November 9, 2006, an officer and project manager of SCC and one individual employed by Granite Halmar were subpoenaed by the MTA in a “confidential investigation.” The witnesses appeared at the hearings and gave testimony; questions were limited to Dan Yant, Inc. To date, SCC has not received any further information regarding the investigation.

 

[Plf.’s Exh. 2; Defs.’ Exh. 135 (hereinafter “Disclosure Letter”) § 4.8(a) ¶ 5.]

 

D. 2007 Investigation

On January 4, 2007—a little less than a year before the parties finalized the SPA—the MTA Office of Inspector General (sometimes referred to as “MTA–OIG”) served a subpoena on SCC in connection with Job 510, the South Ferry project. [Defs.’ Exh. 71 (hereinafter “2007 Subpoena”); Tr. Day 4, Libassi 44:12–45:8.] The 2007 Subpoena was served “in connection with a confidential investigation being conducted before the MTA Inspector General,” and sought the following documents it alleged were material:

 

For the period from June 1, 2004 through the present, any and all documents, contracts, papers, letters, memoranda, reports, correspondence, writings, communications, electronic media, emails, telephone messages, certifications, and identifications pertaining to MTA Capital Contract Number 05022—South Ferry Terminal, including but not limited to the following:

 

1. Employee sign-in sheets for Lashay’s Construction & Development Co., Inc. (Lashay’s).

 

2. Logs of debris removal trucks entering and leaving site.

 

3. Contracts with Lashay’s and A. Morrison Trucking, Inc. (Morrison).

 

4. Documents related to Women Business Enterprise, Minority Business Enterprise or Disadvantaged Business Enterprise status of Lashay’s and Morrison, including but not limited to Monthly Progress Reports and Schedules of DBE Participation.

 

*8 5. Workforce Utilization Forms for Lashay’s and Morrison.

 

6. All communication and correspondence with Lashay’s and Morrison and to MTA and or N.Y. Transit relating to those entities.

 

7. Billings from and payments to Lashay’s and Morrison, including cancelled checks (front and back).

 

8. Identification cards issued for Lashay’s and Morrison employees.

 

9. Employee cards for each employee who has worked, or is working on MTA Capital Contract Number 05022 [Job 510].

 

10. Front and back of checks made on behalf of Lashay’s and Morrison, including checks to CFS Steel Co.

 

11. Contracts, agreements and proposals from CFS Steel Co.

 

12. Minutes of project meetings.

 

13. Breakdown of payments to the Metallic Lather’s Unit on behalf of Lashay’s and cancelled checks (front and back).

 

[2007 Subpoena.] LaShay’s Construction & Development Co., Inc. was a DBE subcontractor retained to furnish and install steel rebar on Job 510 and A. Morrison Trucking, Inc. was a DBE retained to provide trucking services on Job 510. [Tr. Day 4, Libassi 46:1–15; Defs.’ Exh. 201 (Sept. 21, 2006 Monthly Contractor DBE Progress Report).] While the South Ferry project was a SCC joint venture with Granite Halmar, SCC was the “sponsor or the managing partner” responsible for reporting the DBE participation to the MTA. [Tr. Day 4, Libassi 45:2–24.]

 

SCC’s General Counsel Mary Libassi supervised the production of documents responsive to the 2007 Subpoena and she copied Carl Cosenzo, SCC’s executive vice-president, on the cover letters for the documents she turned over to the MTA. [Tr. Day 4, Libassi 47:17–49–1; Defs.’ Exhs. 78, 80.] Libassi understood that the MTA Office of Inspector General was investigating how SCC was counting DBE participation. [Tr. Day 4, 49:2–50:4.] Cliff Brock, the investigator from the MTA Office of the Inspector General, told Libassi that his office intended to interview SCC employees in connection with its investigation. [Defs.’ Exh. 180L (Phone–o–Gram Message); Tr. Day 4, Libassi 75:21–77:9.]

 

On January 9, 2007—three business days after service of the subpoena—a scheduled meeting of the Executive Committee of SCC was held. Frederick Bunker, SCC’s M/W/DBE’s liaison at the time,FN8 told the Committee members about the 2007 Subpoena and that the MTA Inspector General’s Office was seeking documents related to DBE subcontractors. [Defs.’ Exh. 73 (Jan. 9, 2007 Meeting Minutes) p, 6 .] According to the minutes, Bunker revealed that while “A. Morrison is currently working on the project … [t]he only weakness is that [A. Morrison] used other non-DBE truckers to help fulfill his contract with [SCC],” and that the “Rules recognize only DBE truckers for participation purposes.” [Jan. 9, 2007 Meeting Minutes, p. 6; Tr. Day 4, Libassi 50:17–52:11.] FN9 Carl Cosenzo, Greg Vasel, Mary Libassi, Paul Scagnelli, Michael Goldstein, Jim Hamill and Rick Bunker—whose Knowledge is attributable to and binding on Donovan pursuant to Exhibit B of the SPA—were present. [Jan. 9, 2007 Meeting Minutes, p. 1; Tr. Day 4, Libassi 50:17–51:6; SPA Exh. B.] According to her regular practice, Libassi sent a hard copy of the Executive Committee Meeting minutes to both Donovan and Schiavone. [Tr. Day 4, Libassi 52:17–54:24.]

 

FN8. [Tr. Day 2, Bunker 74:1–75:3.]

 

FN9. Bunker explained that while the State rules that apply to NYC DEP allow M/WBEs to use non-DBEs, the MTA/NYCT is different because federal rules apply. [Jan. 9, 2007 Meeting Minutes, p. 6.]

 

*9 The 2007 Subpoena was not disclosed in Sections 4.8(a) or 4.9(c) of the Disclosure Letter. Libassi distinguished the 2007 Subpoena from the 2004 Subpoena disclosed in Paragraph 5 in Section 4.8(a) of the Disclosure Letter, which related to a different SCC project—Job 502, the Times Square MTA station. [Disclosure Letter §§ 4.8(a), 4.9(c); Tr. Day 4, Libassi 57:13–22; see also infra Section IIC.] According to Libassi’s testimony, and not in dispute, she did not tell Dragados about the 2007 Subpoena or provide Dragados with the minutes of the January 9, 2007 Executive Committee Meeting. [Tr. Day 4, Libassi 55:7–58:20.]

 

E. 2008 Search Warrants & Grand Jury Subpoenas

On February 7, 2008, weeks after the parties signed the SPA, search warrants were signed in the District of New Jersey authorizing the seizure of all SCC documents related to Jobs 502, 506, 510, and 511 and all documents related to projects on which SCC utilized certain M/W/DBEs including, but not limited to, T & M Maintenance, A. Morrison Trucking, Dan Yant, J & R Rey Electric, LMS Industrial Distributors, Inc., Wang Engineering, LLC, and LaShay’s Construction and Development Co. [Defs.’ Exhs. 138, 140 (“2008 Search Warrants”).] The 2008 Search Warrants authorized the search of SCC’s main office in Secaucus, New Jersey as well as a SCC office trailer located on Job 511’s worksite. [Id.; Tr. Day 4, Libassi 61:10–20.] Agents of the Federal Bureau of Investigation, U.S. Department of Transportation, U.S. Department of Labor, New York City Department of Investigation, and the Internal Revenue Service arrived at SCC’s corporate offices and conducted the search on behalf of the Inspectors General of the DEP and the MTA. [Tr. Day 4, Libassi 59:2–7; id. (“there w[ere] about 20 people … who came to the office with guns drawn and executed th[e] search warrants.”).]

 

On the same day, SCC was served with two more subpoenas issued by the United States District Court for the Eastern District of New York upon application by AUSA Daniel Brownell. [Defs.’ Exhs. 137, 139 (“2008 Subpoenas”); Tr. Day 4, Libassi 62:19–63:2.] The 2008 Subpoenas demanded documents similar to those authorized to be seized by the 2008 Search Warrants along with all contract documents including, but not limited to, M/W/DBE utilization worksheets and approvals and requests for sub-contractor approval. [2008 Subpoenas.] SCC, now owned by Dragados, produced voluminous documents in response. [Tr. Day 4, Libassi 63:12–64:1.]

 

Bryan Cave LLP was retained to represent SCC and several individual employees during the government’s investigation and to act as a liaison with the U.S. Attorney’s Office. [Tr. Day 4, Libassi 64:2–22.] SCC also authorized the retention of John Ryan, a private investigator tasked with interviewing the DBEs referenced in the 2008 Search Warrants and Subpoenas; a computer consultant to copy the data seized by the government (FTI consulting); and a copy company to duplicate the documents seized by the government (Ikon). [Id. 64:23–67:18.] Kelley Drye & Warren LLP was separately retained to represent Dragados. [Tr. Day 4, Lopez 118:12–25.]

 

F. M/W/DBE Compliance Audit

*10 After the 2008 raid, and while negotiating with the federal government to resolve the potential criminal charges against SCC, Dragados hired Lorraine D’Angelo as a compliance officer and insisted that she report directly to Dragados. [Tr. Day 3, D’Angelo 54:7–12.] D’Angelo undertook an audit of SCC’s M/W/DBE participation, including a review of reports submitted to the MTA and DEP in connection with Jobs 506, 510, and 511—jobs identified in the 2008 Search Warrants. [Id. 54:3–55:25; 2008 Search Warrants.] As part of her audit, D’Angelo reviewed previously filed participation reports, checked to see if all claimed M/W/DBE firms were certified to perform the specified work, ensured claimed M/W/DBEs performed a commercially useful function, and gathered utilization plans, correspondence, invoices, and accounting records showing payment to the M/W/DBEs. [Id. 56:1–22.] Over objection,FN10 D’Angelo testified that her audit revealed SCC had submitted inaccurate reports on Jobs 506, 510, and 511 that overstated M/W/DBE subcontractor participation by more than $27,000,000 and possibly as much as $40,000,000. [Tr. Day 3, D’Angelo 57:7–8, 86:5–8, 89:7–11.] Based on the audit, SCC submitted correction letters that reduced or eliminated the participation that it had claimed on each job. [Id. 57:2–13; see, e.g., Defs.’ Exhs. 174, 176, 177.]

 

FN10. Before trial, Donovan moved in limine to exclude D’Angelo’s testimony on the basis that she was not identified as an expert in the final pretrial order and purportedly lacked the requisite personal knowledge to render lay opinions on matters that occurred prior to her tenure at SCC. [D.E. 210; see also Tr. Day 1, Garrod 11:10–20, 12:1–13:14, 14:22–17:16, 18:18–19:7, 19:22–20:11.] In opposition, Dragados argued that: (1) the ruling Donovan sought was premature as it would be more appropriate for the Court to rule on specific objections to D’Angelo’s testimony as the trial proceeded; (2) D’Angelo was not being offered as an expert; and (3) the rules of evidence allow D’Angelo to testify regarding matters that are reflected in SCC’s business records that she reviewed in connection with her job as SCC’s compliance officer. [D .E. 213; see also Tr. Day 1, Zalman 20:14–22:11.] After hearing both parties’ arguments at the pretrial in limine hearing, the Court denied Donovan’s request to strike D’Angelo’s testimony and decided to rule on the substance of Donovan’s motion in context as the questions were asked. [Tr. Day 1, Court 22:24–23:3, 23:22–25.] At the conclusion of D’Angelo’s testimony, the Court again addressed Donovan’s in limine motion and elaborated upon its basis for permitting her testimony. To that end, the Court was satisfied that D’Angelo’s testimony was based upon her personal review of progress reports, utilization plans, accounting reports, etc., for active pending jobs—including Jobs 506, 510, and 511. Additionally, the Court found that the contents of the reports referred to by D’Angelo were not inadmissible hearsay or so prejudicial to the plaintiff as to create evidentiary improprieties. With respect to several objections that were overruled, related to letters D’Angelo sent to the DEP and MTA correcting prior M/W/DBE reports (Defs.’ Exhs. 174–177), the Court found that these documents were admissible under the business records exception and/or because the rules of evidence and supporting case law allow witnesses to testify as to the content of records reviewed in an official capacity. The Court concluded that D’Angelo fulfilled the guidance and requirements of Fed.R.Evid. 701 as her opinion testimony was rationally based on her perception of the business records and was helpful to clearly understand her testimony. [Tr. Day 4, Court 33:2–38:7 (citing case law).]

 

1. Job 506 Audit ResultsFN11

 

FN11. The audit results contained in sections F(1)-(3) serve as examples of miscounted M/W/DBE participation found during D’Angelo’s audit and do not represent her complete findings.

 

Jo–Di Trucking Inc. is a WBE subcontractor retained to provide trucking and disposal of material services for Job 506. [Defs.’ Exhs. 25, 34 (08/11/05 and 10/24/05 Reports to DEP for Job 506).] On October 30, 2006, Melanie Swalm—SCC’s Compliance Manager at the time FN12—alerted the project manager for Job 506, Pat Rooney that “[a]t this point, Jo–Di does not own any trucks and are using non MWBE truckers,” and warned that “we will not be credited for this anymore should the DEP find out about this .. This may cause us problems in the future with our MWBE credits.” [Defs.’ Exh. 61 (10/30/06 Email from Swalm to Rooney cc’ing Cosenzo); Tr. Day 2, Swalm 21:24–22:3, 31:19–25).] In addition to copying Cosenzo on the above email, Swalm informed Bunker that Jo–Di no longer owned trucks. [Tr. Day 2, Bunker 112:10–16, 113:19–20.] Also on October 30, 2006, SCC submitted a utilization plan and progress report to the DEP for Job 506 that increased the contract value for Jo–Di from $620,550 to $1,426,846.46. [Defs. Exh. 60 (10/30/06 DEP Report for Job 506); Tr. Day 2, Bunker 112:6–9.] By July 17, 2007, SCC had increased Jo–Di’s contract value for Job 506 to $1,518,567.44. [Defs. Exhs. 72, 96 (01/08/07 and 07/17/07 DEP Reports for Job 506); Tr. Day 2, Swalm 32:13–34:3.] After D’Angelo’s audit, Dragados was unable to determine whether Jo–Di actually had any trucks so SCC removed Jo–Di’s WBE participation from Job 506 in the amount of $1,519,058.75. [Defs.’ Exh. 174 (07/15/09 DEP Report); Tr. Day 3, D’Angelo 72:22–73:10; Tr. Day 2, Bunker 114:24–115:6.]

 

FN12. Melanie Swalm was dismissed from SCC in January 11, 2012. [Tr. Day 2, Swalm 53:12–17.]

 

*11 SCC also submitted participation reports for Wang Engineering, a MBE subcontractor retained on Jobs 506 and 511 to provide vibrational analysis, explosives, blasting and pre- and post-construction survey services. [Defs. Exhs. 120, 126 (Utilization plan & progress report to DEP).] Because D’Angelo’s audit determined that SCC personnel rather than Wang ordered the explosives, SCC reduced Wang’s MBE participation for Job 506 for the cost of explosives in the amount of $6,255,936.32. [Defs.’ Exh. 174 (07/15/09 DEP Report for Job 506); Tr. Day 3, D’Angelo 74:7–75:23.] SCC also reduced WBE participation for MF Transportation in the amount of $1,738,809.07 after the audit revealed that it was not certified as a WBE to provide trucking services. [Defs.’ Exh. 174 (07/15/09 DEP Report for Job 506); Tr. Day 3, D’Angelo 73:11–74:3.]

 

In addition, SCC had claimed participation credit for T & M Maintenance Inc. as a WBE subcontractor retained to provide trucking and disposal of material services for Jobs 506 and 511. [Defs. Exhs. 120, 126 (Utilization plan & progress report to DEP).] In 2004, in connection with another job, the DEP notified SCC that T & M was not using any of its own trucks to perform work and Bunker—the M/W/DBE liaison, on behalf of SCC, replied to DEP confirming that he was aware that T & M “did not actually have any trucks, and was utilizing trucks of a relation, Andrews Trucking, a non-M/WBE.” [Defs.’ Exh. 5 (06/25/04 Letter from Bunker to DEP).] Despite the foregoing, SCC increased the contract value for T & M on a number of reports submitted to the DEP resulting in a total contract value of over $6,000,000. [Defs.’ Exh. 96 (07/17/07 DEP Report for Job 506).] Based on D’Angelo’s audit, SCC reduced T & M’s WBE participation for Job 506 in the amount of $6,124.245.75. [Defs.’ Exh. 174 [07/15/09 DEP Progress Report for Job 506); Tr. Day 3, D’Angelo 64:17–65:18, 70:10–19, 72:8–9.]

 

2. Job 510 Audit Results

Job 510—the South Ferry Project—was a SCC and Granite Halmar joint venture in which they contracted with the MTA to replace an existing subway station and construct a new subway route. [Tr. Day 1, Scagnelli 85:17–86:4.] A. Morrison Trucking Inc. was the DBE subcontractor retained to provide trucking services on Job 510.

 

How SCC counted A. Morrison was the subject of the Minutes of the SCC Executive Committee meeting referenced earlier. According to them, Richard Bunker reported to the others that under MTA rules, SCC had improperly counted the trucking DBE participation:

 

Rick [Bunker] informed that we have received a subpoena from the MTA/IG with respect to a DBE subcontractor (LaShay’s Construction) for rebar (furnish and install) and a DBE trucker (A. Morrison Trucking) on the South Ferry Project. A. Morrison is currently working on the project. The only weakness is that he used other non-DBE truckers to help fulfill his contract with us. The Rules recognize only DBE truckers for participation purposes. Carl [Cosenzo] said that NYCDEP allows M/WBEs to use non-DBE truckers. Rick said that State rules apply to NYCDEP. We spoke to the compliance people and they are aware of the situation on Croton and Water Tunnel. The MTA/NYCT is different; federal rules apply.

 

*12 [Jan. 7, 2009 Meeting Minutes p. 6; Tr. Day 2, Bunker 89:15–92:13.]

 

Notwithstanding, SCC did not inform the MTA (or, later on, Dragados) that SCC was taking full participation credit for all monies paid to A. Morrison. [Tr. Day 2, Bunker 94:7–10.] In fact, on March 20, 2007, after the Executive Committee meeting, SCC increased the participation value of A. Morrison Trucking on Job 510 to $5,559,860. [Tr. Day 2, Bunker 94:11–95:1; Defs.’ Exh. 83 (03/20/07 Letter updating DBE participation to MTA, cc’ing Cosenzo, Scagnelli, and Goldstein).] On November 9, 2007, SCC again increased A. Morrison’s participation to $5,589,409. [Defs.’ Exh. 124 (11/09/07 Letter updating DBE participation to MTA, cc’ing Cosenzo and Scagnelli).]

 

As part of D’Angelo’s audit, SCC reviewed the trucking tickets from A. Morrison on Job 510. [Tr. Day 2, Bunker 98:13–99:14, 100:3–101:12.] These tickets show which trucker was on the job site on any given day. [Tr. Day 3, D’Angelo 70:20–71:9.] The audit revealed, and A. Morrison later confirmed, that although SCC reported to the MTA that A. Morrison performed more than $5,500,000 of trucking work, it had actually only performed $1,141,741 in work and a non-DBE (Andrews Trucking) had performed the remaining work. [Defs.’ Exhs. 159, 165 (03/07/08 and 03/17/08 SCC Letters to MTA correcting Morrison DBE participation for Job 510); Tr. Day 2, Bunker 104:25–105:12, 106:2–107:5.] A. Morrison’s records indicated that it claimed a $378,051.77 commission for non-DBE trucks. [Defs.’ Exh. 165.] Progress reports for Job 510 uniformly reflected that SCC responded “No” to the following question: “Did any of the DBE subcontractor[s] subcontract any portion of its work to a non-DBE during the report period?” [Defs.’ Exhs. 51, 59, 63, 69, 75, 76, 82–85, 89, 99, 104, 114, 117, 125, 136, 185–194, 196–201 (Progress Reports to MTA for Job 510); Tr. Day 2, Bunker 89:15–92:13 .] In its correction letter to the MTA, SCC reduced its DBE participation value for A. Morrison to $1,519,793.16—a reduction of $4,069,616.10 from what it previously claimed. [Id.; Tr. Day 2, Bunker 107:17–108:6.]

 

According to the audit, LMS—another DBE company SCC counted on Job 510—was not certified as a DBE to supply lumber and was not performing a commercially useful function because it was merely picking up lumber. [Tr. Day 3, D’Angelo 82:6–13, 84:4–85:13; Defs. Exh. 176, p. 1 (09/29/09 Letter to MTA modifying DBE participation); see also Cosenzo Dep. 36:25–37:14.] In its correction letter, SCC removed LMS’s participation for Job 510 in the amount of $889,709.55. [Tr. Day 3, D’Angelo 85:11–13; Defs. Exh. 176, p. 1.] Similarly, D’Angelo discovered that LaShay’s—a DBE listed in the 2007 Subpoena—was not providing a commercially useful function as it was only furnishing labor and not providing the rebar materials to Job 510, something known at the time to SCC management. [Cosenzo Dep. 39:25–40:7 (noting that he was aware that LaShay’s may not be performing commercially useful function prior to the review).] After the audit, SCC removed LaShay’s participation for Job 510 in the amount of $599,582.50. [Defs.’ Exh. 176 (09/29/09 Letter to MTA modifying DBE participation, p. 2.]

 

3. Job 511 Audit Results

*13 Wang Engineering Services is a MBE subcontractor retained on Jobs 506 and 511 to provide vibrational analysis, explosives, blasting and pre- and post-construction survey services. Wang Engineering was using employees from an associated company on Job 511, and as a result SCC removed $34,726 in participation. [Defs.’ Exhs. 177, 120, 126 (Progress Reports to DEP); Tr. Day 3, D’Angelo 78:20–79:18.] As with Job 506, SCC removed T & M Maintenance’s M/WBE participation in the amount of $1,285,730 because T & M had previously been rejected by the DEP as the subcontractor and because SCC could not confirm that they had any trucks on the project. [Tr. Day 3, D’Angelo 78:3–15; Defs.’ Exhs. 177 (Progress Report to DEP).]

 

G. Non–Prosecution Agreement

Several months after the 2008 Search Warrants and Subpoenas were executed, Libassi and SCC’s counsel from Bryan Cave met with AUSA Brownell, who was in charge of the government’s criminal investigation into SCC, Christopher Hayes from the Civil Division of the U.S. Attorney’s Office, and Mike Carol from the DEP Department of Investigation. [Tr. Day 4, Libassi 68:20–69:21.] Brownell told Libassi and SCC’s counsel that, from the material he had reviewed, including secretly recorded tapes and documents, SCC had improperly counted M/W/DBE participation for DBEs that had not actually done the work. [Id. 71:5–11; 71:24–72:2.] Brownell indicated that Bunker had been taped by Joe Vollaro FN13 and his statements showed that SCC knew that its counting of DBE participation was wrong. [Id. 72:4–12.] When Bunker testified, a recording of the taped conversation was played and Bunker identified the speakers .FN14 [Tr. Day 2, Bunker 127:1–131:9.] The tape establishes that Bunker knew the government was investigating minority participation programs and that he was reluctant to talk to T & M and Andrew’s representatives unless it was face-to-face in the event the phones were tapped. [Id. 135:2–136:7.] Bunker acknowledges in the taped conversation that he knew it was inappropriate—and circumvented the purpose of the DBE program—to use Andrew’s to haul material for the water tunnel project (Job 511) while claiming credit for using T & M—a DBE that did not have any trucks. [Id. 137:2–138:17.] Brownell stated that SCC’s conduct could be considered fraud and that SCC could be indicted. [Tr. Day 4, Libassi 71:12–18.] AUSA Hayes said that the Civil Division could assert False Claims Act and RICO violation claims, which exposed SCC to damages of up to three times the value of the false reporting. [Id. 72:13–25.] During the meeting, SCC agreed to cooperate with the government’s continuing investigation, and to provide witnesses for government interviews. [Id. 73:4–7.]

 

FN13. Joe Vollaro is the owner of Andrews Trucking—a non-DBE trucking company that was used by T & M Maintenance and provided trucks on Job 506. [Cosenzo Dep. 45:3–7.] He was a confidential informant for the government and wore a wire. [Tr. Day 2, Kinsler 56:23–57:3.]

 

FN14. Donovan objected to the admissibility on grounds of authenticity and because the tape was irrelevant hearsay. [D.E. 233 .] With respect to the tape authenticity, Dragados argued that the tape would be properly authenticated through “testimony of a witness with knowledge [Bunker] … that an item is what it is claimed to be….” [D.E. 234 at 5–6 (quoting Fed.R.Evid. 901(b)(1), (b)(5)).] Moreover, Dragados pointed out that Donovan was aware of the provenance of the tape and had access to the tape for at least two years prior to trial. [Id. at 2.] Further, before trial, Dragados identified specific portions of the tape that it intended to play and provided Donovan with a transcript of those portions as a demonstrative exhibit. [Id. at 3; Tr. Day 2, Kinzler 57:7–19 (explaining the provenance of the tape and its production of the tape to Donovan several years earlier).] With respect to the tape’s relevance, Dragados argued that the tape goes to the reasonableness of the settlement. [Id. at 4 (citing Fed.R.Evid. 401).] Finally, Dragados stated that the tape does not constitute inadmissible hearsay because it was being offered to show what was stated during the conversation, not the truth of what was stated. [Id. (citing Fed.R.Evid. 801(c)(2) and case law); see also Tr. Day 2, Kinsler 55:13–56:3.] After Dragados’s attorney laid a foundation with Bunker—establishing that he had knowledge sufficient to show that the tape was a recorded conversation to which he was a party—the Court ruled that Dragados had adequately established the tape’s authenticity. [Tr. Day 2, Court 65:10–67–11 (quoting Fed.R.Evid. 901(b)(1) and (b)(5)); see also id. at 70:13–15, 131:10–134:24.] The Court also found that the tape was relevant to whether the tape’s inculpatory nature justified Dragados’s decision to settle with the government—an issue raised by Donovan. Similarly, with respect to Donovan’s hearsay objection, the Court admitted Bunker’s testimony regarding the tape as evidence not of the truth of the recorded statements, but as evidence of what the government had by way of evidence against SCC. [Tr. Day 2, Court 60:3–61:4, 69:1–5.]

 

In August 2010, there was a meeting between SCC representatives—Libassi, counsel for SCC from Bryan Cave, and counsel for Dragados from Kelley Drye—and AUSAs Brownell and Hayes, Cliff Brock from the MTA Office of the Inspector General, and Doug Schumacher and Richard McGrade from the U.S. Department of Transportation. [Id. 73:8–74:1.] The purpose was to discuss a resolution of the ongoing criminal investigation. [Id. 77:10–19 .] The government attorneys told SCC that contrary to SCC’s hopes for a purely civil settlement, the government had enough evidence to indict. As a consequence, SCC was told that any settlement would require a criminal component through a deferred prosecution agreement as well as a financial penalty of between $25,000,000 and $30,000,000. [Id. 78:8–20.] The fine was calculated based on the difference between what SCC had originally reported as M/W/DBE participation and the amounts that SCC had later corrected and provided to the government agencies. [Id.; see also infra. Section IIF (corrected reports).] In addition, the government lawyers were concerned that two SCC employees, Bunker and Cosenzo, were still working at the company despite having been involved in the inaccurate M/W/DBE participation reporting. [Tr. Day 4, Libassi 78:21–79:24, 85:5–16.] According to DOT’s attorney it was likely that SCC would have to attend a debarment hearing in Washington D.C. [Id. 79:25–80:21, 82:9–83:4.] AUSA Hayes added that if the government pursued civil claims against SCC under the False Claims Act, the government would not settle for less than 2.5 times the value of the aggregate, or between $62,500,000 and $75,000,000. [Id. 83:5–84:11.]

 

*14 After the meeting, SCC decided that Cosenzo and Bunker could resign or be terminated. [Id. 85:21–24.]

 

In a subsequent phone conference, AUSA Brownell told Libassi, D’Angelo, and SCC’s counsel at Bryan Cave that the U.S. Attorney’s office was willing to offer SCC a non-prosecution agreement, as opposed to a deferred prosecution agreement, because of the proactive compliance work SCC had done after the raid and under the control of Dragados. [Id. 85:25–86:3, 86:24–87:6.] The parties agreed to have a face-to-face meeting to discuss what, if any, mitigation credit SCC could be entitled to. [Id. 87:6–22.]

 

Jose Antonio Lopez, President of Dragados and SCC at the time, testified that he was informed of the government’s mounting evidence against SCC, including the secretly recorded tapes and the incorrect information submitted to the MTA and DEP. [Tr. Day 4, Lopez 121:11–17, 156:7–10.] According to Lopez, an indictment would mean that SCC would be out of business and unable to keep bidding on projects until the issue was resolved. [Id. 120:13–19; 122:19–25.] In addition, an indictment would adversely affect Dragados-related entities doing business in the United States. [Id. 119:18–22; 124:3–4; 124:7–17.] Lopez stated that he had an interest in preventing individual SCC employees from being indicted and wanted to pay the least amount of money as possible. [Id. 120:2–3.]

 

In December 2010, after further negotiations, SCC and the government reached a non-prosecution agreement whereby SCC would not be indicted in exchange for its execution of a stipulation of settlement and decree of forfeiture to the federal government of $20,000,000. [Defs.’ Exhs. 398 (“Non–Prosecution Agreement”) at 3; 408 (“complaint in rem”); 409 (“Stipulation of Settlement and Decree of Forfeiture”); Tr. Day 4, Libassi 87:23–95:3.] In addition, the agreement called for SCC to pay investigative costs to the MTA and DEP of approximately $2,370,000 and mandated implementation of a compliance office at SCC to ensure it adhered to the M/W/DBE program requirements. [Non–Prosecution Agreement at 3–4 .]

 

The civil forfeiture complaint specifically referenced Jobs 506, 510, and 511, and recited that SCC had engaged in a scheme to defraud the government by submitting false M/W/DBE reports in violation of 49 C.F.R. Part 26 and New York Executive Law Article 15–a. [See generally complaint in rem; Tr. Day 4, Libassi 90:9–91:16.]

 

SCC issued checks payable to the U.S. Department of the Treasury ($20,000,000), the New York City—Department of Investigation ($539,760), and the MTA–OIG ($1,833,500) on December 13, 2010. [Defs.’ Exhs. 403, 405, 407 (copies of checks).]

 

H. Payments Made to Donovan under the SPA

After SCC’s offices were raided, by letters dated February 27, 2008, March 6, 2008, and December 15, 2008, Dragados informed Donovan and Schiavone that it was seeking indemnification in accordance with SPA Sections 10.1(a) and 10.1(b) for losses arising from breaches of Article IV of the SPA incurred by Dragados in connection with the investigations by several government agencies for possible noncompliance with M/W/DBE rules and regulations. [Defs .’ Exhs. 154, 158, 170 (“Indemnification Notices”).] In addition, Dragados stated that “to preserve its right of offset under Section 10.5 of the [SPA],” it would “not make any Installment Payment or payment for any credit balance for Pre–Closing Tax Periods.” [Defs.’ Exh. 170.] Dragados did not make the Installment Payment ($10,000,000 plus 7% interest per year each) or the pre-closing tax payments ($880,006 NYC General Corporation Tax credit $4,686 N.Y. State franchise tax refund for a total of $884,692 or $442,346 each) to Donovan and Schiavone. [Pl.’s Exhs. 52, 63, 64; Tr. Day 1, Donovan 63:4–7.]

 

*15 By letters dated December 23, 2008 and December 30, 2008, Donovan and Schiavone notified Dragados that its failure to make the payments required by Sections 2.2 and 11.5(a) of the SPA constituted a breach of the covenant to pay. [Pl.’s Exhs. 53 and 54.] One month later, Donovan and Schiavone filed their breach of contract suits against Donovan. [D.E. 1, 19–4.]

 

IV. DISCUSSION & ANALYSIS

The parties dispute how the foregoing facts apply to their respective rights under the SPA. Donovan argues that the payment and indemnification provisions of the SPA entitle him to collect the Installment Payment ($10,000,000 x 7% interest per year), his portion of the pre-closing tax refund ($442,346), and reasonable fees and costs expended in enforcing his rights under the SPA. Dragados argues that it was relieved of its obligation to pay him anything more than it did at the closing in December 2007 in light of Donovan’s material breaches of the representations and warranties in the SPA. The counterclaim asserts that the SPA requires Donovan to reimburse Dragados for the fines and investigative costs Dragados paid to the various government agencies, as well as the legal fees it incurred over the years it negotiated and ultimately settled with the government, and its costs in the within lawsuit.

 

Because Dragados acknowledges that it has not paid the Installment Payment and Donovan’s portion of the pre-closing tax refunds, the bulk of the trial concerned Dragados’s proofs on the counterclaim, which are examined below.

 

A. Breach of Contract

Under New Jersey law, to succeed on a claim for breach of contract, a party must establish: (1) the existence of a valid contract, (2) defective performance by the defendant that resulted in a breach, and (3) resulting damages. MacWilliams v. BP Products N. Am. Inc., No. 09–1844, 2010 WL 4860629, *6 (D.N.J., Nov. 23, 2010) (Kugler, J.) (citing Coyle v. Englander’s, 199 N.J.Super. 212, (App.Div.1985)). Neither party disputes that the SPA constitutes a valid contract. Rather, the parties’ contentions lie with the second and third elements of the contract claim, i.e., whether Donovan breached the contract by making misrepresentations and whether Dragados suffered damages as a result.

 

“A party adequately pleads a breach of contract claim if it alleges a breach of the contract’s representations and warranties provisions.” Inventory Recovery Corp. v. Gabriel, No. 01604, 2012 WL 2990693, *4 (D.N.J. July 20, 2012) (Martini, J.); See also Leder v. Shinfeld, 609 F.Supp.2d 386, 406–07 (E.D.Pa.2009) (allegations that defendant violated “representations and warranties of seller” in a stock purchase agreement were sufficient to state a claim for breach of contract). To prove resulting damages, the party must have suffered a quantifiable loss that was a natural and probable consequence of the defendant’s breach. See MacWilliams, supra, *6 (quoting Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 13 (2007)).

 

B. Dragados Alleges Donovan Breached the SPA

*16 According to Dragados, when deciding whether to purchase SCC, it relied upon specific representations made by Donovan and Schiavone in the SPA. [D.E. 246 (hereinafter “Defs.’ Post–Trial Summ.”), p. 3; see also Tr. Day 4, Lopez 116:16–117:11, 117:19–118:5.] Dragados contends that Donovan breached three of those representations by failing to disclose: (1) the government’s investigation of SCC, including the 2007 Subpoena; (2) that SCC had submitted inaccurate reports to the MTA and DEP in violation of the law—as defined in the SPA; and (3) that SCC’s Books and Records were inaccurate because, at a minimum, they overstated credits for M/W/DBE participation.

 

1. SPA Sections 4.8(a) & 4.9(c)—Failure to Disclose Material Facts

In Section 4.8(a) of the SPA, Donovan represented and warranted to Dragados that: “Except as set forth in Section 4.8(a) of the Disclosure Letter … no material investigation or inquiry by or before any Governmental Authority is pending or, to the Knowledge of SCC, threatened against SCC.” [SPA § 4.8(a).] Under Section 4.9(c), Donovan further represented and warranted to Dragados that: “Except as set forth in Section 4.9(c) of the Disclosure Letter … none of SCC … has received any written notice from any Government Authority that, or otherwise has any Knowledge that [ ] alleges any material noncompliance (or that SCC … is under investigation or the subject of an inquiry by any such Governmental Authority for such alleged noncompliance) with any applicable Law …” [Id. § 4.9(c).]

 

Dragados submits that Donovan breached Sections 4.8(a) and 4.9(c) by failing to disclose the government’s investigation into SCC’s M/W/DBE practices—most notably the issuance of the 2007 Subpoena—even though he and others at SCC were fully aware of the investigation. [Defs.’ Post–Trial Summ., p. 4–5.] Specifically, Dragados argues that at the January 9, 2007 Executive Committee Meeting, Bunker—SCC’s M/W/DBE compliance officer at the time—disclosed to SCC Executives, whose knowledge is attributable to Donovan under the SPA, that SCC received the 2007 Subpoena and conceded that SCC submitted reports in connection with Job 510 that contained inaccurate information. [Id., p. 7–8 (citing Jan. 9, 2007 Meeting Mins.; Tr. Day 4, Libassi 52:17–54:24).] Further, Dragados contends that SCC’s General Counsel, Mary Libassi, whose knowledge is also binding on Donovan, was informed by MTA Investigator, Cliff Brock, that the 2007 Subpoena was issued in connection with the MTA’s investigation into SCC’s counting of DBE participation. [Defs.’ Post–Trial Summ., p. 8–9 (citing Tr. Day 4, Libassi 52:17–54:24).] It necessarily follows, Dragados argues, that Donovan made material misrepresentations in Sections 4.8(a) and 4.9(c) in breach of the SPA by failing to disclose the 2007 investigation in the Disclosure Letter or in communications with Dragados prior to closing. [Defs.’ Post–Trial Summ., p. 9–10.]

 

*17 In opposition, Donovan argues that Dragados has not proved that he breached Section 4.9(c) because there is no evidence that “written notice” from a government agency existed at any time prior to the closing date indicating that SCC was under investigation for material noncompliance with the law. [D.E. 245 (hereinafter “Pl.’s Post–Trial Summ.” p. 6–7, 18).] Donovan asserts that the 2007 Subpoena does not constitute written notice that SCC was under investigation because the subpoena sought records on a joint venture and the subject of the subpoena was a “confidential investigation”—not SCC. [Id.] Donovan states that SCC personnel testified that they did not have any knowledge that SCC was the subject of a pending investigation prior to the closing date. [Id. 11, 21 (citing trial testimony).] Donovan also argues that Dragados has failed to show that he breached Section 4.8(a) because there is no evidence of an announcement or expression of intent to investigate by a government agency, which he alleges is required to prove that a material investigation was “pending” or “threatened.” [Id., p. 8, 10, 14.]

 

The Court is not persuaded by Donovan’s argument that SCC did not breach its representation because, at the time the SPA was signed, he was unaware that SCC was being investigated as no written notice or announcement regarding the investigation was made by any governmental agencies. The 2007 Subpoena pertained to SCC’s use of certain DBEs and despite the fact that Job 510 was a Granite Halmar joint venture, SCC was the “sponsor or the managing partner” responsible for reporting the DBE participation to the MTA. [Tr. Day 4, Libassi 45:2–24.] Further, the Court finds relevant and credible Libassi’s testimony that establishes that she understood that the MTA Office of Inspector General was investigating how SCC was counting DBE participation. [Tr. Day 4, 49:2–50:4, 75:21–77:9.] Other SCC higher-ups, specifically the members of SCC’s Executive Committee—whose knowledge is imputed to Donovan—were fully aware of the MTA’s investigation after they learned of the 2007 Subpoena and Bunker told them about SCC’s inaccurate reports submitted for Job 510 at the January 9, 2007 meeting. [Jan. 9, 2007 Meeting Mins.; Tr. Day 4, Libassi 52:17–54:24).] FN15

 

FN15. As noted above, Carl Cosenzo, Greg Vasel, Mary Libassi, Paul Scagnelli, Michael Goldstein, Jim Hamill and Rick Bunker—whose Knowledge is attributable to and binding on Donovan pursuant to Exhibit B of the SPA—were present at the January 9, 2007 Executive Committee Meeting. [Jan. 9, 2007 Meeting Minutes, p. 1; Tr. Day 4, Libassi 50:17–51:6; SPA Exh. B.] According to her regular practice, Libassi sent a hard copy of the Executive Committee Meeting minutes to both Donovan and Schiavone. [Tr. Day 4, Libassi 52:17–54:24.]

 

At trial, Donovan attempted to support his argument that SCC personnel did not know SCC was the subject of a pending investigation in various ways that ultimately were unpersuasive. For example, Donovan’s recourse to the discovery and the trial transcript for cryptic or incomplete statements does not add up to a coherent or persuasive presentation. The 2007 Subpoena, which was disclosed during the Executive Committee Meeting, and Cliff Brock’s statements to Libassi constitute expressions of intent to investigate by the MTA. But even absent such convincing evidence, Sections 4.8(a) and 4.9(c) of the SPA do not require “an announcement or expression” as Donovan suggests. Rather, these provisions solely require “the knowledge of SCC” including that of Libassi and other members of the Executive Board. [See SPA § 4.8(a) (where Donovan represented that “SCC has furnished … a complete list of each … action, claim … or other proceeding that has been instituted, or to the knowledge of SCC, threatened against, by or affecting SCC.”); id. § 4.9(c) (where Donovan represented that except as set forth in the Disclosure Letter, “none of SCC … or the Shareholders has received any written notice from any Governmental Authority that, or otherwise has any Knowledge that, alleges any material noncompliance … with applicable law or could reasonably be expected to result in a material fine …”).]

 

*18 In the alternative, Donovan argues that the 2007 “confidential investigation” was in fact disclosed to Dragados because it was a continuation of the 2004 investigation referenced in Section 4.8(a), Paragraph 5 of the Disclosure Letter. [Pl.’s Post–Trial Summ., p. 15, 18.] This is unpersuasive on two fronts. Evidence at trial indicated that the 2007 investigation was distinguishable from the 2004 investigation because it was about a different project and different subcontractors. And, as Dragados points out, Donovan effectively nullified the “continuation” argument when he specifically represented in the Disclosure Letter that, with respect to the 2004 Subpoena: “To date, SCC has not received any further information regarding the investigation.” [Defs.’ Post–Trial Summ., p. 10 (citing Disclosure Letter § 4.8(a)); Tr. Day 4, Libassi 57:13–22).]

 

Regarding damages, Donovan contends that assuming the 2007 investigation was distinct, Dragados has failed to establish a causal connection between its claimed losses and the “confidential investigation” that was the subject of 2007 Subpoena. [Pl.’s Post–Trial Summ., p. 30–31.] In this respect, Donovan argues that the 2008 Search Warrants and Subpoenas could not have been predicted or disclosed in the SPA because they represent an entirely separate investigation from the 2007 Subpoena and were the first announcements that the U.S. Attorney was investigating SCC. [Id., p. 13–15, 20.] This argument fails to recognize the overwhelming proofs that the attorneys’ fees and settlement costs Dragados incurred in avoiding a criminal indictment directly stem from SCC’s pre-closing inaccurate M/W/DBE plans and reports. [Defs.’ Post–Trial Summ., p. 33–34.] And directly counter to Donovan’s position, the 2008 Search Warrants and Subpoenas requested documents relating to SCC’s use of certain DBEs on Jobs 506, 510 and 511. [See, supra, Section IIF; 2008 Subpoena & Search Warrants; Tr. Day 4, Libassi 58:21–62:18.]

 

Based on the foregoing, the Court finds that Donovan breached the SPA by representing that, with the exception of that which was disclosed, no action or proceeding had been instituted or threatened by any governmental authority that would affect SCC in violation of Sections 4.8(a) and 4.9(c) of the SPA. Moreover, the facts demonstrate that the fees and costs incurred in Dragados’s negotiations and ultimate settlement with the government were the “natural and probable consequences” of Donovan’s misrepresentations. MacWilliams, supra, *6 (quoting Totaro, 191 N.J. at 13). There can be no question that the 2007 Subpoena and the knowledge of SCC’s Executive Committee that SCC had overstated DBE participation on certain jobs are significant facts that any purchaser would want to know before committing to spend $150,000,000. [Defs.’ Post–Trial Summ., p. 10–11.]

 

2. SPA Section 4.9(a)—Submitting Inaccurate M/W/DBE Reports in Violation of the Law and Maintaining Inaccurate Books & Records

*19 Donovan represented and warranted in Section 4.9(a) of the SPA that “SCC, each of its Subsidiaries, PPR and the Shareholders … are, and have been at all times, in compliance in all material respects with all applicable Laws.” [SPA § 4.9(a) ] In that subsection, Donovan also represented that “[a]ll Books and Records … of SCC and its Subsidiaries have been maintained, in all material respects, accurately and in accordance with applicable Law.” [Id.] “Books and Records” are defined in the SPA as “compliance records, … and other materials prepared for or filed with Governmental Authorities regulating the businesses of SCC and its Subsidiaries …” [Id. § 1.1.]

 

Dragados argues Donovan breached Section 4.9(a) because SCC submitted reports to government agencies that were both in violation of applicable laws and regulations and materially inaccurate. [Defs .’ Post–Trial Summ., p. 11.] Specifically, Dragados alleges that SCC repeatedly submitted utilization plans and progress reports to the MTA and DEP regarding M/W/DBE participation on Jobs 506, 510, and 511 that contained incorrect information. [Id.]

 

Dragados states that D’Angelo’s audit of SCC’s M/W/DBE participation revealed that SCC’s reports to the MTA on Job 510 violated 49 C.F.R. § 26.55 which mandates that contractors working on a DBE job (like SCC) submit reports to the MTA accurately reflecting the value of the work “actually performed” by a certified DBE subcontractor or the value attributable to work by a certified DBE subcontractor “perform[ing] a commercially useful function.” [Id., p. 12–13, 19–26 (citing trial exhibits and testimony regarding the inaccuracies of the MTA reports); see also supra Section IIF.] Dragados states that the audit also revealed that the submission of inaccurate reports to the DEP on Jobs 506 and 511 violated New York Executive Law Article 15–a, 40 C.F.R. Part 35, and the EPA’s 1997 Guidance for the Utilization of M/WBEs, which require that contractors working on a M/WBE job (like SCC) submit reports to the DEP that accurately reflect the value of work by a “certified” M/WBE subcontractor performing a useful business function. [Id., p. 13–14, 26–31 (citing trial exhibits and testimony regarding the inaccuracies of the DEP reports).] Dragados argues that D’Angelo’s determination that SCC repeatedly submitted reports to the MTA and DEP on Jobs 506, 510, and 511, counting work for subcontractors that it knew were either not certified or not serving a commercial useful function, demonstrates that SCC’s reports were inaccurate and violated the applicable law and Donovan’s failure to disclose that information to Dragados constitutes a breach of Section 4.9(a). [Id.]

 

In opposition, Donovan argues that on the eve of trial—for the first time—Dragados alleged SCC’s noncompliance violated 49 C.F.R. § 26.55, 40 C.F.R. Part 35, New York Executive Law Article 15–a, and the EPA M/WBE Guidance whereas Dragados had previously asserted noncompliance with 49 C.F.R. § 26.55, 40 C.F.R. § 33.503, and New York Executive Law Article 15–a. [Pl.’s Post–Trial Summ., p. 32–33.] Donovan surmises that Dragados’s correction of the Title 40 C.F.R. Section reflects its realization that 40 C.F.R. Part 33 was not effective until May 2008. [Id.] Donovan alleges the Court should not consider this newly cited law or the EPA Guidance because they were not set forth in the Final Pretrial Order. [Id.] FN16 In response, Dragados argues that it has “consistently alleged that SCC was in violation of these rules by submitting inaccurate M/W/DBE forms to the government.” [Defs.’ Post–Trial Summ. at 14, n. 9 (citing Tr. Day 3, D’Angelo 55:14–57:13, 90:16–91:13, 92:25–93:8, 99:17–102:2.).] Dragados points out that in 2008, the EPA combined 40 C.F.R. Part 35, its 1997 Guidance, and other relevant rules into one regulation—40 C.F.R. Part 33—in an effort to streamline its rules, regulations, and guidelines governing the M/WBE program. [Id. at 13, n. 8 (citing 73 Fed.Reg. 15904, 15905 (2008) (noting that, prior to 2008, the “EPA’s MBE/WBE Program [was being] implemented through [e]xisting MBE and WBE provisions scattered throughout 40 CFR parts 30, 31, 35 and 40[and] the Agency’s ‘Guidance for the Utilization of Small, Minority and Women’s Business Enterprises in Assistance Agreements.’ ”)).] Therefore, Dragados argues, its reliance on 40 C.F.R. Part 33, passed in 2008, which combined the prior scattered guidance into one regulation, is therefore irrelevant as the rules were the same while SCC was owned by Donovan, and SCC was not in compliance with them. [Id. at 14, n. 9.]

 

FN16. Donovan also argues that the EPA Guidance is not an applicable law because the SPA does not specifically include agency “guidance” documents in its definition of “Law.” [Pl.’s Post–Trial Summ., p. 33 (citing SPA § 1.1).] The Court is satisfied, however, that the EPA document could be considered “law,” as it is broadly defined in the SPA as “any law, ordinance, writ, directive, judgment, order, decree, injunction, statute, treaty, rule, regulation, regulatory requirement or determination of a Governmental Authority.” [SPA § 1.1.]

 

*20 Without commenting on the import of the particular authority Donovan objects to, the Court finds that Donovan has not sufficiently shown how he was prejudiced by Dragados’s reliance on this authority. Moreover, the use of the EPA Guidance by Donovan’s counsel during depositions in this case, in addition to the legislative history of the authority cited by Dragados, belies his argument that he was unaware of its relevance in this case. [Tr. Day 3, D’Angelo (reading back deposition testimony at 93:3–8; 97:11–6; 101:5–22; 102:20–103:5).]

 

Donovan also argues that Dragados’s “strict liability” approach to showing SCC’s noncompliance with the agencies M/W/DBE regulations is simply wrong because these programs depend on flexibility in implementation, good faith efforts to raise participation, and state and agency level discretionary judgment calls. [Pl.’s Post–Trial Summ., p. 34–35, 42–44, 60–61.] In this respect, Donovan contends that D’Angelo’s calculation of SCC’s noncompliance ignores the flexibility of the M/W/DBE programs by failing to take into consideration subsequent changes or good faith efforts made and disregards the fact that failing to meet the aspirational DBE goals is not a de facto violation of the regulations. [Id.] FN17 It necessarily follows, Donovan states, that because Dragados could not prove that SCC failed to undertake good faith efforts to fulfill its participation goals it therefore has failed to prove noncompliance with the law. [Id., p. 49.] Donovan further argues that SCC cannot be deemed to be in material noncompliance with applicable law because the MTA and DEP approved the M/W/DBE participation submitted by SCC on Jobs 506, 510, and 511. [Id., p. 52–55.] According to Donovan, the fact “that the agencies reviewed the actual participation, knew of the misreporting because of the corrective letters and, nevertheless, still approved the participation and plans without once asserting that SCC was in non-compliance, demonstrates that the agencies—as the arbiters of compliance—concluded that the incorrect reporting alone was insufficient to constitute non-compliance.” [Id. p. 54.]

 

FN17. Donovan also alleges that D’Angelo’s testimony may not be relied upon to describe a M/W/DBE program and how it functions because there was not a foundation laid as to her experience with either of the applicable programs. [Id., p. 50–52.]; see also supra, n. 10 (foundation of D’Angelo’s testimony).

 

Much of Donovan’s good faith position is specious in light of the evidence. As a practical matter, any good faith efforts required by the relevant DBE programs must be viewed in conjunction with the mandates that govern these programs requiring that contractors such as SCC only count participation for certified DBEs performing commercially useful functions. Donovan breached Section 4.9(a) when he represented that SCC complied with all applicable law—as the term is broadly defined in the SPA—despite imputed knowledge to the contrary. Moreover, by acknowledging that corrective letters were filed following the audit, Donovan is conceding that at the time the reports were filed they contained inaccuracies in violation of the “Books and Records” provision of Section 4.9(a) of the SPA.

 

Donovan contends that even if Dragados were able to introduce competent evidence of miscounting—sufficient to carry its burden of proof that Donovan breached Section 4.9(a)—any alleged technical noncompliance was not the cause of SCC’s settlement with the government. Fraud and criminal claims were. [Pl.’s Post–Trial Summ., p. 37, 57–58.] In this regard, Donovan argues that in order for Dragados to recover for SCC’s settlement under a breach of contract theory, it must prove the settlement of the U.S. Attorney’s mail fraud and FCA claims is the natural and probable consequence of the claimed unintentional violations of M/W/DBE regulations. [Id., p. 58 (citing Donovan v. Bachstadt, 91 N.J. 434, 444–45 (1982).] Donovan contends that Dragados has failed to make this essential showing because liability under the criminal mail fraud or FCA statutes cannot be imposed for innocent errors and because the U.S. Attorney’s claim involved the use of “fronts,” which does not involve the counting of M/W/DBE participation. [Id ., p. 59–60.]

 

*21 As with Sections 4.8(a) and 4.9(c) above, Dragados maintains that attorneys’ fees and settlement costs—incurred in avoiding a criminal indictment—directly stem from SCC’s pre-closing inaccurate M/W/DBE plans and reports which violated the law as is defined in the SPA. [Defs.’ Post–Trial Summ., p. 33–34.] The evidence fully supports Dragados on this point. [See, supra, Section IIF; Non–Prosecution Agreement; Tr. Day 4, Libassi 58:21–62:18.]

 

Based on the foregoing, the Court finds that Donovan breached the SPA by representing that SCC was in compliance with all applicable laws in violation of Section 4.9(a) of the SPA. Moreover, the fees and costs incurred in Dragados’s negotiations and ultimate settlement with the government were the “natural and probable consequences” of Donovan’s misrepresentations. MacWilliams, supra, *6 (quoting Totaro, 191 N.J. at 13).

 

C. Dragados Alleges it is Entitled to Indemnification from Donovan for Damages Incurred in Connection with the Government’s Criminal Investigation

 

1. Indemnification Under the SPA

 

Dragados has consistently argued that as a direct result of Donovan’s breach of the SPA’s representations, it was forced to hire counsel and negotiate a settlement with the government to avoid a crippling prosecution based on SCC’s submission of inaccurate M/W/DBE plans and reports. [Defs.’ Post–Trial Summ., p. 32.] Dragados contends that an indictment would have risked the destruction of SCC and injured the entire Dragados family of businesses because SCC would not have been able to bid on any public projects. [Id. at 39 (citing Tr. Day 4, Lopez 122:19–123:5; Tr. Day 4, Libassi 81:4–82:8); see also id. at 42, n. 17 (citing Tr. Day 4, Lopez 124:7–13).]

 

Dragados relies on Section 10.1 of the SPA in support of its argument that Donovan is obligated to indemnify it for 100% of any losses caused by his breaches including reasonable attorneys’ fees and expenses that were paid by any Parent Indemnified Person, which explicitly includes SCC. [Id., p. 32–34 (citing SPA § 10.1).] Section 10.1(a) provides that Donovan and Schiavone must: “severally and not jointly, indemnify, defend and hold harmless Parent [Dragados], each of its Subsidiaries (including SCC and its Subsidiaries), and each of their respective directors, officers, managers and employees (and the respective heirs, successors and assigns of each of the foregoing) (the “Parent Indemnified Persons”) from and against and in respect of one hundred percent (100%) of all Parent Losses.” [SPA § 10.1(a).] “Parent Losses” are further defined in the SPA as:

 

all actual losses, liabilities, damages, judgments, settlements and expenses (including interest and penalties recovered by a Third Party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of the rights of the Parent Indemnified Persons arising under Articles X and XI) incurred by any of the Parent Indemnified Persons, whether or not involving a Third–Party claim, which are caused by, arise from or are related to: (i) any breach by [Donovan], Schiavone or SCC of any of their respective representations and warranties contained in or made by or pursuant to Article IV …

 

*22 [Id. § 1.1.] In accordance with Section 10.1(b), Donovan and Schiavone must also:

… severally and jointly, indemnify, defend and hold harmless the Parent Indemnified Persons from and against and in respect of one hundred percent (100%) of all actual losses, liabilities, damages, settlements and expenses (including interest and penalties recovered by a Third Party with respect thereto and reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of the rights of the Parent Indemnified Persons arising under Article X) incurred by any of the Parent Indemnified Persons, whether or not involving a Third–Party claim, which are caused by, arise from or are related to (i) any breach of any representation or warranty made by SCC, [Donovan] or Schiavone pursuant to Article IV or Article V, (ii) any covenant of [Donovan] or Schiavone contained in this Agreement …; provided, however, that, in the case of any representation or warranty that is limited by “material,” “Material Adverse Effect” or by any similar term or limitation, the occurrence of a breach or inaccuracy of such representation or warranty … and the amount of losses subject to indemnification hereunder shall be determined as if “material,” “Material Adverse Effect” or by any similar term or limitation were not included therein.

 

[SPA § 10.1(b) (underlining in original).]

 

Dragados states that the damages here include the $22,370,000 in penalties against SCC, the more than $3,840,000 in legal and professional fees that Dragados and SCC incurred in defending against and negotiating the settlement of criminal charges, and the on-going legal and professional fees incurred in this litigation. [Id., p. 34–35, 44–45.] The SPA makes provision for paying damages for breach:

 

first, until the Installment Payment is made by Buyer, offset against the obligation of Buyer to make payment to such Shareholder [Donovan] of Shareholder [Donovan’s] one-half (1/2) share of the [$20 million] Installment Payment; and second, if and only if the claims of the Parent Indemnified Persons are not satisfied by payment out of or offset against such foregoing amount to such Shareholder [Donovan] in accordance with the terms of this Section 10.5, by Shareholder [Donovan] and Schiavone, severally and not jointly.

 

[Id., p. 35 (quoting SPA § 10.5).] Based on this provision, Dragados alleges it can offset the first $10,000,000 of its claimed damages against the outstanding $10,000,000 Installment Payment. The amount by which its damages exceed $10,000,000, Dragados argues, must be paid by Donovan. [Id.]

 

Donovan opposes for several procedural and substantive reasons. He claims that indemnification was waived because Dragados failed to give him notice that it would be seeking indemnification for any Parent Losses it incurred as a result of the U.S. Attorney’s claim of fraud—as is required under SPA Section 10.3 and New Jersey law. [Pl.’s Post–Trial Summ., p. 62–71.] He argues this lack of notice deprived him of the opportunity to evaluate the merits of the government’s claim and that he was intentionally “kept out” of the settlement negotiations with the government. [Id., p. 68–70.] On this point, Dragados maintains that it gave prompt notice to Donovan in accordance with Section 10.3 in letters dated February 27, 2008, March 6, 2008, and December 15, 2008, which all contain the term “indemnification” in the subject line. [Defs.’ Post–Trial Summ., p. 34 (citing Defs.’ Exhs. 154, 158, 170).] Additionally, Dragados references earlier court orders that required it to provide Donovan with real-time updates about the status of its negotiations with the government and granted Donovan additional discovery related to the reasonableness of the settlement. [See D.E. 100, FPTO at § 2; D.E. 168.] Donovan counters that the letters do not constitute adequate notice because they do not mention the Third Party claim of fraud or criminal mail fraud made by the U.S. Attorney against SCC. [Pl.’s Post–Trial Summ., p. 63–70 .] Donovan also argues that despite updates on the status of Dragados’s negotiations with the government and its ability to “take some limited depositions” on the reasonableness of the settlement, he was “deprived of discovery,” because he “didn’t get the documents that [Dragados] claimed are privileged or work product.” [Tr. Day 1, Garrod 50:5–52:10.]

 

*23 Donovan’s arguments are unavailing and in certain respects, waste the Court’s time. Dragados satisfied the notice provision of Section 10.3 by its letters dated February 27, 2008, March 6, 2008, and December 15, 2008, which articulated its decision to withhold the Installment Payment as an indemnification offset for representations it felt were made by Donovan and its reservation of any and all other rights. [Defs.’ Exhs. 154, 158, 170.] The record reveals that Donovan was not left in the dark regarding the status of Dragados’s negotiations with the government. Dragados was ordered to—and did—provide Donovan with all communications with the government within 72 hours of receipt or transmittal. [FPTO at § 2; D.E. 168.] Donovan was also permitted sufficient discovery into the reasonableness of the settlement. [Id.]

 

As to Donovan’s argument that Dragados waived its indemnification claim, the Court is satisfied that the plain language of the contract makes clear that any Parent Indemnified Person, including Dragados and SCC, may recover for any losses including settlements incurred or sustained by any Parent Indemnified Person. [See SPA §§ 1.1, 10.2; Tr. Day 1, Zalman 36:2–6.] In addition, Dragados is not seeking to recover for the wrongdoing of SCC but rather is seeking to recover for Donovan’s breaches of the representations and warranties in the SPA and, as a party to the SPA, it may seek to enforce its terms. [Tr. Day 1, Zalman 37:22–25.] Finally, the Court easily rejects Donovan’s argument that Dragados is not entitled to indemnification solely because SCC cut the checks to the government, as it was ultimately Dragados’s money that funded the settlement. [See Defs.’ Response to Pl.’s Damages Motion In Limine, p. 15.]

 

Donovan also argues that Dragados cannot recover legal or professional fees because the SPA bars indemnification for indirect, consequential, and incidental damages. [Pl.’s Post–Trial Summ., p. 78–82.] But the plain language of SPA—namely, Section 10.1, which governs Donovan’s indemnification obligations under the SPA, and the definition of Parent Losses—clearly provide that attorneys’ fees are recoverable losses by Dragados whether or not involving a Third Party claim. [See generally Defs.’ Response to Plf’s Damages Motion In Limine, p. 12–21.]

 

2. Reasonableness of Settlement

Donovan argues that Dragados must show that the settlement amount was reasonable by providing proofs in support of the U.S. Attorney’s claim that SCC committed fraud in its reporting of M/W/DBE participation on SCC Jobs 502, 506, 510, and 511, or through the use of expert testimony. [Pl.’s Post–Trial Summ., p. 88–106.] Donovan asserts that Dragados has done neither and thus it is not entitled to indemnification under the SPA. [Id., p. 88–89.] Specifically, Donovan argues that testimony elicited from D’Angelo, Libassi, and Lopez was speculative, incompetent, and not probative of the reasonableness of the settlement, as it did not substantiate the government’s fraud allegations. [Id., p. 94.] Donovan contends that the only evidence that Dragados proffered in support of the U.S. Attorney’s case against SCC is the conversation secretly recorded by Joe Vollaro, which Donovan describes as lacking any indication that SCC was engaging in a fraudulent scheme. [Id., p. 100–101.] Beyond that, Donovan continues, the record lacks any evidence that would support the U.S. Attorney’s fraud claim and further reveals that Dragados failed to mount any substantial challenge to the government’s claims. [Id., p. 101.]

 

*24 In response, Dragados contends that the reasonableness of the settlement with the government is apparent from the facts adduced at trial. [Defs.’ Post–Trial Summ., p. 36–44.] Those facts include:

 

• the broad scope of the 2008 Search Warrants and Subpoenas executed at two SCC sites by agents from at least five different government agencies;

 

• representations made by the U.S. Attorney’s Office regarding its strong evidence, including secretly recorded statements, in support of its allegation that SCC’s miscounting of M/W/DBE participation credit amounted a host of different charges against SCC including indictable fraud and/or RICO and False Claims Act violations;

 

• AUSA Brownell’s representation that the government was looking for between $25,000,000 and $30,000,000 to resolve the matter;

 

• AUSA Hayes’s representation that a settlement of the FCA case would amount to between $62,500,000 and $75,000,000;

 

• Schumacher’s representation that SCC would likely be subjected to a debarment hearing;

 

• SCC’s inability to bid on projects once an indictment was issued; and

 

• the adverse effect an indictment would have on Dragados-related entities doing business in the United States as Dragados is the construction arm of ACS—a public company in Spain with a number of subsidiaries that wanted to get involved in bidding projects in the United States.

 

[Id., p. 32, n. 14, 36–43 (citing 2008 Search Warrants & Subpoenas; Tr. Day 4, Libassi 58:21–64:1, 68:20–69:21, 71:5–72:2, 73:4–74:1; 77:10–80:21, 81:4–84:11; Tr. Day 4, Lopez 119:18–120:19, 121:11–17, 122:19–123:5, 124:3–4, 124:7–17, 156:7–10).] The Court finds that Dragados has marshaled convincing proofs about the strength of the government’s case, the effect of that case going forward, and the basis for the financial calculations to support fully the reasonableness of the settlement reached between SCC and the authorities.

 

Finally, Donovan continues to assert an estoppel argument in his post-trial arguments, as he has in his pre-trial submissions, to this effect: the millions that Dragados paid the government were based on admissions of mail fraud, yet Dragados has been steadfast that its lawsuit against Donovan is not based on fraud. [Pl.’s Post–Trial Summ., p. 106–115; Tr. Day 1, Garrod 25:21–26:7, 47:4–9; D.E. 211–2 (Pl.’s Pretrial Mot. to Strike Damages) at 29–36.] Hence, according to Donovan, the claim for $22,370,000 is barred. On this point, the Court agrees with Dragados that it need not establish that SCC actually committed mail fraud; rather, as case law provides, it only needs to establish that Donovan breached the representations in the SPA, that those breaches injured Dragados, and that those injuries were the natural and probable result of the breach. [Defs.’ Post–Trial Summ., p. 31–32 (citing Totaro, supra, 191 N.J. at 13 and Caro Assocs. II, LLC v. Best Buy Co., No. 09–907, 2012 WL 762304 (D.N.J. March 6, 2012)).] Dragados maintains that Donovan breached certain representations that caused it to incur millions of dollars in damages because all of the alleged criminal violations set forth by the U.S. Attorney’s office stemmed from SCC’s submission of false M/W/DBE reports to the government. [Id. at 33–34; Tr. Day 1, Zalman 33:25–34:15, 37:22–25, 42:14–43:15; D.E. 215 (Defs.’ Opp. to Pretrial Mot. to Strike Damages) at 17–18.] Indeed, the civil forfeiture complaint specifically referenced Jobs 506, 510 and 511, and set forth that SCC engaged in a scheme to defraud the government by submitting false M/W/DBE reports in violation of 49 C.F.R. Part 26 and New York Executive Law Article 15–a. [Id., p. 41 (citing Defs.’ Exh. 408 (“Civil Forfeiture Complaint”); Tr. Day 4, Libassi 90:9–91:16.] In addition, Job 510 was the subject of the 2007 Subpoena that Donovan failed to mention in the Disclosure Letter. [Id. (citing 2007 Subpoena; Civil Forfeiture Complaint; Tr. Day 4, Libassi 91:17–21).]

 

V. CONCLUSION

*25 Because there is a direct connection between Donovan’s breaches of the SPA and the ultimate settlement of criminal charges with the government, Dragados is entitled to recover the $22,370,000 million payment to the government. [Defs.’ Post–Trial Summ., p. 44–45.] In accordance with the express terms of the SPA, the Court is satisfied that Dragados is entitled to offset the first $10,000,000 of this damage amount against the outstanding $10,000,000 Installment Payment owed to Donovan. [SPA § 10.5.] FN18 Section 10.5 of the SPA also compels Dragados to divide the remaining $12,370,000 in half as all damages in excess of the Installment Payment are to be offset by Donovan and Schiavone “severally and not jointly.” [Id .] The SPA also requires that the remaining $6,185,000 in damages owed to Dragados be reduced by Donovan’s portion of the pre-closing tax refunds withheld by Dragados-$442,346 plus interest accruing from ten business days after receipt of such refunds. [Id. at § 11.5.]

 

FN18. Section 10.5 of the SPA, which dictates how indemnification obligations should be satisfied, states that the amount owed by Donovan under Article X is first to be offset by his “one-half (1/2) share of the Installment Payment.” The provision later states that interest on the Installment Payment is appropriate only if it is later determined that Dragados was not entitled to such indemnification. As such, Donovan is not entitled to offset the interest attributable to his portion of the Installment Payment.

 

Dragados contends that the SPA also allows recovery of attorneys’ fees incurred in defending against—and ultimately settlingthe criminal charges against SCC, and the fees incurred in connection with the present litigation. [Defs.’ Post–Trial Summ., p. at 45; see also id. at 34 (quoting SPA § 10.1).] The Court is satisfied that the indemnification provision of the SPA contemplates recovery of both sets of fees and expenses and appoints Hon. John E. Keefe, Sr. (ret.) to serve as Special Master for the purposes of determining the attorneys’ fees and costs incurred by Dragados. Judge Keefe will also determine the appropriate interest attributable to Donovan’s half of the pre-closing tax refund for the purposes of offsetting the total damages owed to Dragados. The parties shall share equally the costs and expenses associated with the Special Master’s services, with final allocation to be determined by the Court upon recommendation of the Special Master.

 

The parties shall make arrangements with Judge Keefe’s office to have a teleconference with him no later than 20 days after the filing of this opinion. The Court will enter such orders as are necessary to effectuate his requirements regarding submissions, their contents and length, and the briefing and hearing schedule he and the parties agree upon. The Court further directs that Judge Keefe shall have the discretion to hold a plenary hearing on discrete issues that he may identify. Judge Keefe’s final Report and Recommendations shall be filed no later than 60 days after his teleconference with the parties. This deadline may be extended for good cause with the consent of the parties

Tracey POWELL, Individually and as Special Administrator of the Estate of Adam McDonald, Deceased; George Kakidas, Individually and as Special Administrator of the Estate of Diana Kakidas, Deceased; and Alexander Chakonas, as Special Administrator of the Estate of Christina Chakonas, Deceased, Plaintiffs–Appellees,

v.

DEAN FOODS COMPANY, Alco of Wisconsin, Inc., and Jaime L. Reeves, Defendants–Appellants.

 

Nos. 1–08–2513, 1–08–2554.

June 28, 2013.

 

Appeal from the Circuit Court of Cook County, 03 L 15077, 03 L 16261, Patricia Banks, Judge Presiding.

 

OPINION

Presiding Justice McBRIDE delivered the judgment of the court, with opinion:

*1 ¶ 1 In July 2002, Adam McDonald, Diana Kakidas and Christina Chakonas were tragically killed when a tractor-trailer driven by defendant Jaime L. Reeves struck their vehicle at an intersection in Wanatah, Indiana. Plaintiffs, Tracey Powell, individually and as special administrator of the estate of Adam McDonald, deceased; George Kakidas, individually and as special administrator of the estate of Diana Kakidas, deceased; and Alexander Chakonas, as special administrator of the estate of Christina Chakonas, deceased, filed wrongful death actions against defendants Reeves; Dean Foods Company (Dean Foods), the owner of the trailer; Alco of Wisconsin, Inc. (Alco), Reeves’ employer; and Alder Group, Inc. (Alder), owner of the tractor. Following a trial, the jury returned a verdict in favor of plaintiffs, finding defendants jointly and severally liable, and awarded $8 million to the McDonald estate, $8 million to the Kakidas estate, and $7 million to the Chakonas estate. In a special interrogatory, the jury also found that Christina Chakonas was 40% contributorily negligent in causing the collision and reduced the award to the Chakonas estate accordingly to $4.2 million.

 

¶ 2 Defendants raise several issues on appeal: (1) the trial court erred in denying Alder’s motion for a substitution of judge; (2) the trial court erred in denying their motions for judgment notwithstanding the verdict and a new trial because the sole proximate cause of the accident was Christina Chakonas driving into the right-of-way of Reeves’ tractor-trailer; (3) the jury’s allocation of only 40% of the causative fault to Christina Chakonas was against the manifest weight of the evidence; (4) the trial court abused its discretion by allowing evidence of defendants Reeves, Alco and Alder’s prior bad acts; (5) the trial court abused its discretion in giving the “careful habits” jury instruction (Illinois Pattern Jury Instructions, Civil, No. 10.08 (2006) (hereinafter, IPI Civil (2006) No. 10.08) with respect to the conduct of Christina Chakonas; and (6) the amount of the monetary awards by the jury does not bear a reasonable relationship to the recoverable pecuniary damages proved at trial.

 

¶ 3 Dean Foods presents the following additional issues on appeal: (1) Dean Foods was entitled to judgment notwithstanding the verdict on plaintiffs’ claims for agency and joint venture; (2) the claims against Dean Foods by plaintiffs Powell and Kakidas were barred by the statute of limitations; (3) the jury’s finding that Reeves was acting as an agent and/or joint venturer of Dean Foods at the time of the accident is contrary to the manifest weight of the evidence; and (4) the trial court erred in failing to instruct the jury on the burden of proof applicable to plaintiffs’ agency and joint venture claims.

 

¶ 4 We are reviewing this case for a second time following a remand by the Illinois Supreme Court. In a prior opinion, we considered defendants’ argument that the trial court erred in denying Alder’s motion for substitution of judge as a matter of right, and we agreed with defendants and vacated all orders subsequent to the improper denial and remanded for a new trial before a new trial judge. See Powell v. Dean Foods Co., 405 Ill.App.3d 354, 344 Ill.Dec. 901, 938 N.E.2d 170 (2010). The Illinois Supreme Court granted the petition for leave to appeal. Before the supreme court, plaintiffs filed a joint motion to dismiss Alder with prejudice. The supreme court granted the motion to dismiss and concluded that the remaining defendants, Reeves, Alco and Dean Foods, lacked standing to appeal the denial of Alder’s motion for substitution of judge as a matter of right. The supreme court vacated our prior decision and remanded the case to this court to consider the remaining issues raised on appeal. Powell v. Dean Foods Co., 2012 IL 111714, 358 Ill.Dec. 333, 965 N.E.2d 404. Alder is no longer a party to this appeal.FN1

 

*2 ¶ 5 Before addressing the issues presented on appeal, we set out the relevant facts.

 

¶ 6 On July 6, 2002, Adam McDonald and Diana Kakidas were passengers in a 2002 Pontiac Grand Am automobile driven by Christina Chakonas. All three occupants of the Chakonas vehicle were killed when a tractor-trailer driven by defendant Jaime L. Reeves, hauling 80,000 pounds of Dean Foods milk product, collided with the Chakonas vehicle. The tractor-trailer collided with the Chakonas vehicle as the Chakonas vehicle crossed the eastbound lanes of traffic on Route 30, in the process of turning left into the westbound lanes of Route 30, at the intersection of Route 30 and Lincoln Street in Wanatah, Indiana.

 

¶ 7 Two actions were filed in the circuit court of Cook County as a result of the fatal collision. In December 2003, plaintiff Chakonas filed his original complaint which was assigned case No. 03 L 15077, and named Reeves; Alco, Inc.; Alco of Wisconsin, Inc., d/b/a/ Robert Alder & Sons; and Dean Foods as defendants.FN2 In July 2004, plaintiff Chakonas filed an amended complaint, naming Reeves; Alco, Inc.; Alco of Wisconsin, Inc.; Dean Foods; and Dean Illinois Dairies, LLC, as defendants.

 

¶ 8 Also in December 2003, plaintiffs Powell and Kakidas filed their original complaint, assigned case No. 03 L 16261, naming only Reeves and Dean Foods as defendants. In July 2004, plaintiffs Powell and Kakidas filed an amended complaint, naming Reeves; Alco of Wisconsin, Inc.; Alder Group; and Dean Illinois Dairies, LLC, as defendants. In August 2004, plaintiff Chakonas filed a motion to consolidate the Chakonas and Powell/Kakidas actions, which the trial court granted in September 2004. In October 2007, immediately prior to the start of the trial, plaintiffs Powell and Kakidas moved for leave to file a second amended complaint, naming Dean Illinois Dairies, LLC, Dean Foods, Alco, Alder and Reeves. The trial court granted the motion.

 

¶ 9 Jaime Reeves was called as an adverse party witness by plaintiffs Powell and Kakidas. Reeves testified that he was a full-time truck driver employed by Alco. Reeves stated that July 6, 2002, was a Saturday. His log showed that he finished work the previous day at 1 a.m. on July 6 and he had driven 347 miles. At 9 a.m. on July 6, Reeves drove from his house to a facility in Chemung, Illinois, which was approximately 45 miles away. Reeves then drove to Richland Center, Wisconsin, approximately 135 miles away. At the Richland Center facility, he “dropped the trailer and hooked to another one,” which took 15 minutes. He then drove back to Chemung. His next load was not known at that time and he was off duty from 3 p.m. to 7:45 p.m. He did not drive the truck during that period of time. His next destination was Rochester, Indiana to which he was en route at the time of the accident.

 

¶ 10 Route 30 is a four-lane, divided highway. Reeves stated that the speed limit was 55 miles per hour until Wanatah, Indiana. He had driven this route many times in the past. Reeves stated that he did not recall his speed and could not remember if he used the cruise control. Reeves said he remembered seeing the signs prior to Wanatah, reducing the speed limit to 40 miles per hour. Reeves said he was not tired or fatigued at the time of the accident.

 

*3 ¶ 11 Reeves testified that the accident occurred between 10 and 10:30 p.m. His truck headlights and running lights were turned on. He stated that he slowed down as he approached Wanatah by taking his foot off of the accelerator and using the engine brake. He said he had to slow down gradually and not “slam” on the brakes because he was carrying a full load of milk in gallon jugs and that could make the truck “hard to control.” Reeves said he was driving east and the weather was dry and clear with slightly heavier traffic than normal. When asked to describe his speed as he approached the intersection where the accident occurred, Reeves stated that he was “slowing down with the flow of the traffic.” He was not watching his speedometer, but he estimated that he was traveling “between 40 and 45 [miles per hour].” He said that he told people at the scene of the accident the same speed estimate.

 

¶ 12 Reeves described the circumstances of the accident as follows:

 

“As I was approaching Lincoln Street there was a pickup turning right onto Lincoln Street to head south. And there was a vehicle that pulled out right—right in front of me that was going to go west onto Route 30. And then—and then another vehicle just followed right out of nowhere like a deer. It came out of nowhere. It was there.”

 

¶ 13 Reeves testified that he “collided with the second vehicle.” He said he “was on the brakes and we eventually stopped aways [sic ] down the road” after his truck made contact. According to Reeves, his brakes were applied before he struck the vehicle.

 

¶ 14 When asked if he also worked for Alder, Reeves stated that Alco was part of Alder. Alco scheduled his trips, including the determination of how long the trip would be, how many stops Reeves would make, and had the responsibility of being aware of the “70–hour rule.” Plaintiffs’ counsel summarized the “70–hour rule” as driving “70 hours during the course of an eight-day period.” Reeves confirmed the description, stating that the rule comes from the federal government.

 

¶ 15 Reeves was asked questions about the Alder driver’s manual. Specifically, counsel inquired about paragraphs referring to Dean Foods, noting that the manual provides that “through your actions and from your general appearance these people will form their opinions of Dean’s Foods Company,” “your job and the future of Alder’s and Dean’s Food Company depends largely upon good public relations,” and “keep smiling and driving with continuing pride in the job you perform as you roll along as part of the blue-and-white Dean fleet.” Reeves agreed that the manual contained those statements. Reeves was asked if he was a representative of Dean Foods when driving the truck and Reeves answered that “it would appear so, yes.” Reeves also testified that his truck had multiple Dean Foods emblems and lettering for Alco.

 

¶ 16 He described his job as delivering “dairy products from point A to point B.” He said he “would routinely pull out of Chemung, Illinois, go to Rochester, Indiana, [and] go to Richland Center, Wisconsin.” According to Reeves, no one from Dean Foods told him how to do his job. On July 6, 2002, Alco told Reeves to start the trip; he had no contact with Dean Foods.

 

*4 ¶ 17 Reeves was questioned about his logbooks for his time on the road. He stated that he completed weekly trip tickets, but he did not know what happened to the trip ticket for the week ending July 6, 2002, the night of the accident. The purpose of his trip tickets was to keep track of his stops, the miles driven in each state, and the fuel put into the truck. He maintained the logbook with his trip tickets in his truck.

 

¶ 18 When Reeves was asked if his logbooks had been audited by the federal motor carrier compliance inspector in June 2002, defense counsel made a continuing objection, which the trial court overruled. Reeves testified that he did not know when the audit took place, but the company had been audited. When asked if “it was determined by the federal government that [he] had falsified [his] logs,” Reeves answered that he “had made some mistakes on them.” He was not sure if the finding used the word “falsified.” Reeves testified that Alco was fined, but “they didn’t get the fine * * * just because of me.” Additionally, Reeves stated that he was not disciplined, but was shown what he was doing wrong in his logbooks so he “wouldn’t do it again.” Reeves denied that he intentionally wrote incorrect information in the logbooks. He testified that he “was writing stuff down wrong.” He learned how to do it correctly after the audit.

 

¶ 19 Robert Youngreen testified that on July 6, 2002, he was driving his Dodge pickup truck east on Route 30 with Reeves’ truck behind him, approaching Wanatah. When asked if he was driving “a little over 55 miles per hour,” Youngreen answered, “probably right in there, yeah.” He could clearly see the truck in his rearview mirror. As he entered the Wanatah city limits, Youngreen agreed that he was driving about 40 or 45 miles per hour. Youngreen stated that the truck never passed him on Route 30. Youngreen did not see the truck change lanes.

 

¶ 20 According to Youngreen, as he approached Lincoln Street, he slowed down to make a right turn. He stated that the right turn lane was “not very long.” As he slowed to make the turn, he saw one car cross Route 30 to make a left turn as he was “just coming to the turn lane.” Youngreen stated that the first vehicle pulled into the intersection when he was about 100 feet away. He also saw a white car stopped at the stop sign on Lincoln, but he did not see the car move into the intersection. Youngreen made the right turn and then heard what he described as a tire exploding and then “a bunch of debris hit our pickup.” Youngreen stated that he was going slow, because it was a sharp corner. He looked back and saw sparks. He turned around and went back to the intersection, where he saw that sparks were coming from the front of the truck.

 

¶ 21 Christian Reid and Stephanie Solma testified that they were friends of McDonald, Chakonas and Kakidas. On July 6, 2002, the group of Reid, Solma, McDonald, Chakonas and Kakidas decided to go to a local dance club. They went in two cars with Reid driving one car with Solma as a passenger and Chakonas driving the second car with passengers, Kakidas and McDonald. Reid stated that Chakonas knew where the dance club was and there was no plan that she had to follow him.

 

*5 ¶ 22 Reid was driving on Lincoln and stopped at the intersection with Route 30. He made a left turn onto westbound Route 30 and as he was making the turn he stopped in the median to check the traffic headed west. When Reid was turning onto Route 30, Solma looked back to see if Chakonas’ car was behind them and she saw that it was stopped at the stop sign. While he was driving, Reid was looking in his rearview mirror and he saw the accident between Chakonas’ car and a semitruck. Solma turned around and saw the truck pushing Chakonas’ car. Reid estimated that he traveled 300 to 500 yards before the accident occurred. Reid testified that about ten seconds passed from when he was at the stop sign and he saw the accident in his rearview mirror.

 

¶ 23 Troy Layton testified that in July 2002 he was employed as a patrol officer with the LaPorte County police department. He was dispatched to the accident at Route 30 and Lincoln and arrived shortly after the accident occurred. On cross-examination, Layton stated that his police report did not indicate that Reeves was fatigued. Layton agreed that there were no signs of anyone being asleep or tired.

 

¶ 24 Dean Ayen testified that he was employed as a manager for Alder and Alco. He was Reeves immediate supervisor and would set Reeves’ schedule and routes. Ayen stated that the tractor involved in the accident was owned by Alder and the trailer was owned by Dean Foods. According to Ayen, Alder exclusively “pulls” Dean Foods products.

 

¶ 25 Ayen testified that Reeves would turn in his trip tickets on Saturday or Sunday, at the end of a week. The trip tickets would be used to calculate Reeves’ pay. Ayen stated that the company has 30 other drivers who would use the tractor when it was in Chemung. On the day of the accident, Reeves volunteered to make the run between Chemung and Rochester, Indiana, because Reeves had the hours available to drive. Ayen looked at the log to verify, but did not check anything else to see if Reeves still had hours he could drive.

 

¶ 26 Ayen testified that he was aware of the audit of Reeves’ logbooks and the finding that the logs had been falsified and that Alder had been fined. Ayen explained that the audit was random and the majority of the fine was for local delivery drivers. The audit found four or five “over-the-road problems,” including Reeves. Ayen stated that the problem was the “the wrong miles on a log. It could have been an hourly add or subtraction was what they found on that.”

 

¶ 27 Daniel White testified that he was the assistant safety manager for Alder. He performed the compliance reviews on the logs. White stated that he did not find any problems with Reeves’ logbooks, but the audit did find that there were falsifications. This finding was prior to July 2002. White testified that a log of “anything past 575 to 600 miles in a 24–hour period” would have caught his attention.

 

¶ 28 Donald Hess testified as an expert witness for plaintiffs with his expertise based on his years working as a truck driver and teaching truck driving courses. His opinions were “based around the fact that Mr. Reeves and the employers violated a number of federal safety statutes that are related to truck driving,” and he specifically referred to regulations relating to fatigue and speed. During Hess’s testimony, Hess stated that “the company [was] dispatching the driver too many miles per day” and “the driver then [was] speeding, in order to get these runs accomplished.” Defense counsel objected that Hess’s opinion regarding speed were improper because his opinion on the subject had not been previously disclosed. Following a sidebar, the trial court overruled the objection.

 

*6 ¶ 29 Hess opined that these circumstances led to fatigue and referred to the federal regulation that a driver was limited to 70 hours of work time over an 8–day period. The hours of service requirements were in place to help drivers avoid being fatigued. Hess concluded that Reeves had been in excess of the service hour requirements “so he was fatigued.” Hess admitted that he did not have any “specific information” that Reeves was fatigued at the time of the accident. Hess also testified that if Reeves had not been speeding, then he would not have reached the location when the car pulled out.

 

¶ 30 Hess testified about inconsistencies in Reeves’ log compared to the truck’s Detroit Diesel Electronic Controls (DDEC), considered to be the truck’s “black box.” He stated that the DDEC report was frequently at odds with Reeves’ daily log for his hours. Specifically, Reeves’ log from the week leading up to the crash indicated that the truck was not being driven, but the DDEC showed the truck in use for some of that time. Hess said in reviewing the DDEC report, he made the assumption that at any time the truck is idling, then Reeves was on duty, but not driving. Hess admitted that drivers might be off duty and sleeping with the air conditioning running, which would have the truck in idle mode on the DDEC. Hess also acknowledged that the DDEC does not indicate who is driving the truck and another driver could be operating the truck. Hess detailed the entire week prior to the accident and compared the DDEC report to Reeves’ logs to determine his driving and duty hours. Hess relied exclusively on the DDEC report to form his opinion that Reeves had exceeded the 70–hour rule prior to July 6, 2002. In contrast, Reeves’ logs for that week indicated that he had driven less than 70 hours.

 

¶ 31 Hess also testified that the data retrieved from the semi-truck’s engine control module (ECM) showed that on July 1, Reeves had reached a speed of 79.5 miles per hour and that Reeves’ average speed was 65.9 miles per hour. Hess concluded that in his opinion, the violations of the federal regulations were the cause of death of the plaintiffs’ decedents.

 

¶ 32 Michael Rogers investigated the accident as an expert for plaintiffs. Rogers measured the distance between the point of impact and the point of rest as approximately 358 feet. The distance between the stop sign and the point of impact was approximately 58 feet. Rogers testified about the report from the sensing diagnostic module (SDM) from Chakonas’ vehicle, which is the car’s “black box” that “monitors the acceleration or movement of the vehicle and also gathers information from other vehicle components.” It can sense when a collision is occurring to determine “whether this collision is going to be sufficient in magnitude to warrant a deployment of the air bag.” The SDM stores this information, including vehicle speed, for up to five seconds before the air bag is deployed. Rogers stated that five seconds before the accident, the car was traveling 4 miles per hour and the brake was on. At the time of the accident, he testified that Chakonas’ vehicle was traveling 12 miles per hour.

 

*7 ¶ 33 Based on his analysis of the scene and the vehicle reports, Rogers opined that the truck speed at the time of impact was 49.5 miles per hour. Rogers stated that a hard brake event would be recorded by the ECM if the truck speed slows more than 7 miles per hour in one second. Rogers testified that a minute before the hard brake event, the truck was on cruise control and set at 65 miles per hour. Rogers said that in the last five seconds, the truck’s speed was “dropping off much quicker” than it had been before that time. In his opinion, the reason for that decrease was the impact. Rogers testified that the truck’s brake was applied four seconds after the impact and “that’s what resulted in an even greater rate of slowing that cause[d] the hard brake event to occur.” Rogers opined that “this collision would not have occurred if the truck was going 40 by the time it got to the second 40 mile per hour sign.” Rogers also stated that the car would have had sufficient time to clear the lane if the truck had been going 55 miles per hour instead of 65 miles per hour.

 

¶ 34 R. Matthew Brach also testified as an expert for plaintiffs about his investigation of the accident. Brach stated that the first sign reducing the speed limit to 40 miles per hour from 55 miles per hour is about three-tenths of a mile from the accident intersection. Based on his reconstruction and using the DDEC, Brach testified that the truck was going 49.5 miles per hour at the point of impact. He further stated that the brakes were applied when the truck was going 37 miles per hour, which was three seconds after the impact. Brach also opined that if the truck had been going 40 miles per hour, then it would have been 130 feet west of the point of impact. Brach testified that Chakonas’ vehicle would have moved past the point of impact.

 

¶ 35 Steven Rickard testified as an expert for defendants. In his opinion, Rickard concluded that Reeves was traveling 37 miles per hour when the collision occurred. He stated that according to the hard brake report, the cruise control was turned off 20 seconds before the hard brake. The foot was off the accelerator and the speed showed “a normal gradual continuation of slowing, and then, something happens.” Rickard opined that just before the hard brake, Reeves moved his foot to the brake pedal. Rickard also noted that the engine load increased 16% at the hard brake, which was not present a second earlier. Rickard testified that the increase in engine load was caused by the car being pushed.

 

¶ 36 Rickard also reviewed the reports from Chakonas’ vehicle’s SDM. Based on that data, Rickard stated that vehicle did not brake within five seconds of the airbag deployment. Rickard testified that in his opinion, it was not safe for Chakonas’ vehicle to pull in front of the truck. Rickard admitted on cross-examination that he never visited the scene of the accident in reviewing the case. The parties rested after Rickard’s testimony.

 

*8 ¶ 37 During closing arguments, counsel for Kakidas and McDonald argued that Reeves should be found 65% to 75% responsible for the accident and Chakonas “should be in the area of 35 percent to 25%.” Similarly, Chakonas’ attorney argued that defendants were 75% at fault for the accident. He conceded Chakonas “made a mistake” that was a proximate cause of the accident and she was 25% at fault. The jury found in favor of plaintiffs, but determined that Chakonas was 40% contributorily negligent in causing the accident.

 

[1] ¶ 38 We first address Dean Foods’ argument that the Powell/Kakidas claims against it are barred by the statute of limitations. Dean Foods argues that filing of the Powell/Kakidas amended complaint which omitted Dean Foods as a defendant constituted a voluntary dismissal of Dean Foods and that the Powell/Kakidas second amended complaint was time barred because it was not filed within one year of the filing of the Powell/Kakidas amended complaint. On appeal, Dean Foods asserts that the Powell/Kakidas second amended complaint did not relate back to the Powell/Kakidas original complaint.

 

¶ 39 As noted, on October 12, 2007, Powell and Kakidas sought leave to file their second amended complaint instanter, seeking to add “Dean Foods Company” as a defendant. The trial court granted Powell and Kakidas leave to file their second amended complaint instanter and also granted Dean Foods leave to answer or otherwise plead to the Powell/Kakidas second amended complaint. On October 18, 2007, Dean Foods filed a motion to dismiss the Powell/Kakidas complaint because it was not named as a defendant in the Powell/Kakidas amended complaint and that the inclusion of “Dean Foods Company” in the October 12, 2007, Powell/Kakidas second amended complaint, over objection, was barred by the statute of limitations. Dean Foods argued that the filing of the Powell/Kakidas amended complaint constituted a voluntary dismissal of Dean Foods that was time barred if not refiled within one year and that the Powell/Kakidas second amended complaint pled new theories that did not relate back to the Powell/Kakidas original complaint. Powell and Kakidas filed a response to Dean Foods’ motion to dismiss, arguing:

 

“Dean Foods [Company] was never voluntarily dismissed by [Powell and Kakidas]. It was inadvertently left off the amended complaint when [defense counsel] advised [Powell and Kakidas’ counsel] that Dean Illinois Dairies, LLC, was the owner of the trailer, not Dean Foods [Company].

 

* * *

The evidence adduced in discovery, and at trial, indicates that Dean Foods Company is a proper defendant. Furthermore, Dean Foods [Company] will suffer no prejudice by being included in [the Powell/Kakidas second amended complaint], because it has always been a defendant in the consolidated case of Chakonas v. Dean Foods Company, No. 03 L 15077. Finally, [the Powell/Kakidas second amended complaint] relates back to their timely filed [original complaint and amended complaint].”

*9 Powell and Kakidas further asserted that their second amended complaint corrected the “clerical omission of Dean Foods [Company] from the amended complaint.”

 

¶ 40 On October 29, 2007, the trial court denied Dean Foods’ motion to dismiss the Powell/Kakidas second amended complaint.

 

¶ 41 Section 2–616(b) of the Code of Civil Procedure governs the relation-back doctrine and provides as follows:

 

“The cause of action, cross claim or defense set up in any amended pleading shall not be barred by lapse of time under any statute or contract prescribing or limiting the time within which an action may be brought or right asserted, if the time prescribed or limited had not expired when the original pleading was filed, and if it shall appear from the original and amended pleadings that the cause of action asserted, or the defense or cross claim interposed in the amended pleading grew out of the same transaction or occurrence set up in the original pleading, even though the original pleading was defective in that it failed to allege the performance of some act or the existence of some fact or some other matter which is a necessary condition precedent to the right of recovery or defense asserted, if the condition precedent has in fact been performed, and for the purpose of preserving the cause of action, cross claim or defense set up in the amended pleading, and for that purpose only, an amendment to any pleading shall be held to relate back to the date of the original pleading so amended.” 735 ILCS 5/2–616(b) (West 2006).

 

[2][3][4][5] ¶ 42 The purpose of the relation-back doctrine is to preserve meritorious causes of action against a dismissal by reasons of a technical default. Porter v. Decatur Memorial Hospital, 227 Ill.2d 343, 355, 317 Ill.Dec. 703, 882 N.E.2d 583 (2008); Stevanovic v. City of Chicago, 385 Ill.App.3d 630, 633, 324 Ill.Dec. 569, 896 N.E.2d 355 (2008). Trial courts are to liberally construe the requirements of section 2–616(b) (735 ILCS 5/2–616(b) (West 2006)) to allow resolution of litigation on the merits and to avoid elevating questions of form over substance. Porter, 227 Ill.2d at 355, 317 Ill.Dec. 703, 882 N.E.2d 583 (citing Bryson v. News American Publications, Inc., 174 Ill.2d 77, 106, 220 Ill.Dec. 195, 672 N.E.2d 1207 (1996), and Boatmen’s National Bank of Belleville v. Direct Lines, Inc., 167 Ill.2d 88, 102, 212 Ill.Dec. 267, 656 N.E.2d 1101 (1995)). Both the statute of limitations and section 2–616(b) are designed to afford a defendant a fair opportunity to investigate the circumstances upon which liability is based while the facts are accessible. Porter, 227 Ill.2d at 355, 317 Ill.Dec. 703, 882 N.E.2d 583 (citing Boatmen’s National Bank, 167 Ill.2d at 102, 212 Ill.Dec. 267, 656 N.E.2d 1101). The rationale behind the “same transaction or occurrence” rule is that a defendant is not prejudiced if “ ‘his attention was directed, within the time prescribed or limited, to the facts that form the basis of the claim asserted against him.’ “ Boatmen’s National Bank, 167 Ill.2d at 102, 212 Ill.Dec. 267, 656 N.E.2d 1101 (quoting Simmons v. Hendricks, 32 Ill.2d 489, 495, 207 N.E.2d 440 (1965)). “A court should consider the entire record, including depositions and exhibits, to determine whether the defendant had such notice.” Porter, 227 Ill.2d at 355, 317 Ill.Dec. 703, 882 N.E.2d 583 (citing Wolf v. Meister–Neiberg, Inc., 143 Ill.2d 44, 46, 155 Ill.Dec. 814, 570 N.E.2d 327 (1991)).

 

*10 ¶ 43 In this case, the suit was commenced within the limitations period, Dean Foods received notice of the proceedings, actually participated in them, and cannot claim prejudice as the causes of action alleged in the Powell/Kakidas second amended complaint grew out of the same transactions or occurrence set up in the Powell/Kakidas original complaint. Therefore, we find that the allegations of the second amended complaint are not barred by the statute of limitations as a result of the doctrine of relation back.

 

[6] ¶ 44 We next address defendants’ claims that the trial court should have granted their motions for judgment notwithstanding the verdicts. Defendants contend that the evidence presented at trial failed as a matter of law to establish that Reeves was the legal cause of the accident because Reeves was the driver on the preferential highway and it was not reasonably foreseeable that Chakonas’ vehicle, with a stop sign and a duty to yield the right of way, would proceed into the intersection in front of Reeves’ semitruck. Plaintiffs respond that the evidence proved that Reeves was negligent because, if Reeves had not been speeding, as their experts testified, then Chakonas would have been able to cross the lanes of traffic safely. Plaintiffs maintain that the evidence of Reeves’ excessive speed and his violation of federal regulations, by driving over 70 hours in an 8–day period, established that Reeves was the legal cause of the collision.

 

[7][8][9][10][11] ¶ 45 A motion for judgment notwithstanding the verdict should be granted only when all the evidence, viewed in the light most favorable to the nonmovant, so overwhelmingly favors the moving party that no other verdict based on the evidence could stand. Barth v. State Farm Fire & Casualty Co., 228 Ill.2d 163, 177, 319 Ill.Dec. 852, 886 N.E.2d 976 (2008) (citing Pedrick v. Peoria & Eastern R.R. Co., 37 Ill.2d 494, 510, 229 N.E.2d 504 (1967)). “ ‘This is clearly a very difficult standard to meet, limiting the power of the [trial] court to reverse a jury verdict to extreme situations only.’ “ Velarde v. Illinois Central R.R. Co., 354 Ill.App.3d 523, 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (2004) (quoting People ex rel. Department of Transportation v. Smith, 258 Ill.App.3d 710, 714, 197 Ill.Dec. 263, 631 N.E.2d 266 (1994)). “ ‘[I]t is the province of the jury to resolve conflicts in the evidence, to pass upon the credibility of the witnesses, and to decide what weight should be given to the witnesses’ testimony.’ “ Velarde, 354 Ill.App.3d at 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (quoting Maple v. Gustafson, 151 Ill.2d 445, 452, 177 Ill.Dec. 438, 603 N.E.2d 508 (1992)). “ ‘A trial court cannot reweigh the evidence and set aside a verdict merely because the jury could have drawn different inferences or conclusions, or because the court feels that other results are more reasonable.’ “ Velarde, 354 Ill.App.3d at 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (quoting Maple, 151 Ill.2d at 452, 177 Ill.Dec. 438, 603 N.E.2d 508). “ ‘The [trial] court has no right to enter a [judgment notwithstanding the verdict] if there is any evidence, together with reasonable inferences to be drawn therefrom, demonstrating a substantial factual dispute, or where the assessment of credibility of the witnesses or the determination regarding conflicting evidence is decisive to the outcome.’ “ Velarde, 354 Ill.App.3d at 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (quoting Maple, 151 Ill.2d at 454, 177 Ill.Dec. 438, 603 N.E.2d 508). This court reviews a trial court’s decision to grant or deny a motion for judgment notwithstanding the verdict de novo; however, like the trial court, we must be careful not to usurp the function of the jury and substitute our own assessment. Velarde, 354 Ill.App.3d at 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (citing Jones v. Chicago Osteopathic Hospital, 316 Ill.App.3d 1121, 1125, 250 Ill.Dec. 326, 738 N.E.2d 542 (2000)).

 

*11 [12][13][14] ¶ 46 The term “proximate cause” involves two components: cause in fact and legal cause. First Springfield Bank & Trust v. Galman, 188 Ill.2d 252, 257–58, 242 Ill.Dec. 113, 720 N.E.2d 1068 (1999) (citing Lee v. Chicago Transit Authority, 152 Ill.2d 432, 455, 178 Ill.Dec. 699, 605 N.E.2d 493 (1992)); see also Abrams v. City of Chicago, 211 Ill.2d 251, 258, 285 Ill.Dec. 183, 811 N.E.2d 670 (2004). Cause in fact exists where there is a reasonable certainty that a defendant’s acts caused the injury or damage, but a defendant’s conduct is a cause in fact of the plaintiff’s injury only if that conduct is a material element and a substantial factor in bringing about the injury. Galman, 188 Ill.2d at 258, 242 Ill.Dec. 113, 720 N.E.2d 1068. “A defendant’s conduct is a material element and a substantial factor in bringing about an injury if, absent that conduct, the injury would not have occurred.” Galman, 188 Ill.2d at 258, 242 Ill.Dec. 113, 720 N.E.2d 1068. Whereas, “legal cause” is a question of foreseeability and “[t]he relevant inquiry here is whether the injury is of a type that a reasonable person would see as a likely result of his or her conduct.”   Galman, 188 Ill.2d at 258, 242 Ill.Dec. 113, 720 N.E.2d 1068.

 

¶ 47 Defendants cite to a series of cases recognizing the “unavoidable collision” principle, as it has been termed, in arguing that Reeves’ excessive speed was not the legal cause of the collision. See Hale v. Cravens, 129 Ill.App.2d 466, 472, 263 N.E.2d 593 (1970); Salo v. Singhurse, 181 Ill.App.3d 641, 643, 130 Ill.Dec. 272, 537 N.E.2d 339 (1989); Johnson v. May, 223 Ill.App.3d 477, 165 Ill.Dec. 828, 585 N.E.2d 224 (1992); Coole v. Central Area Recycling, 384 Ill.App.3d 390, 400, 323 Ill.Dec. 289, 893 N.E.2d 303 (2008). Plaintiffs assert that this line of cases is distinguishable from the present case because this case included the testimony of multiple expert witnesses to explain the circumstances of the collision and those cases lacked expert testimony.

 

“In cases where the reviewing court has concluded an accident was unavoidable, the courts have found the following:

 

‘[T]he motorist on the preferential road had the right to expect that the vehicle approaching on the secondary road controlled by a stop sign would obey the stop sign and yield the right-of-way. When the motorist drove into the path of the preferential driver, the circumstances afforded no opportunity to avoid the collision.’ “ Coole, 384 Ill.App.3d at 398, 323 Ill.Dec. 289, 893 N.E.2d 303 (quoting Guy v. Steurer, 239 Ill.App.3d 304, 309, 179 Ill.Dec. 1020, 606 N.E.2d 852 (1992)).

 

¶ 48 In Hale, the plaintiffs were driving on U.S. Route 54 in Illinois. Route 54 is a two-lane highway, with a speed limit of 65 miles per hour. It was the preferential highway with no stop signs. The defendant was traveling on Buffalo Hart Road, which had a stop sign at the intersection with Route 54. A jury verdict was returned in favor of defendant and plaintiffs appealed.

 

¶ 49 The Hale court noted that the defendant had a statutory duty to stop and yield the right-of-way to the plaintiffs and the only bar to the plaintiffs’ recovery was their contributory negligence, which in this case could have been the plaintiffs’ speed and failure to keep a proper lookout.   Hale, 129 Ill.App.2d at 471–72, 263 N.E.2d 593. The Hale court reasoned that “[a] traveler on a preferential highway has a right to expect a car approaching along a secondary road controlled by a stop sign to obey the stop sign and yield the right-of-way as required by law.” Hale, 129 Ill.App.2d at 472, 263 N.E.2d 593.

 

*12 “ ‘Stop signs are erected for the obvious purpose of requiring motorists to yield to vehicles on through highways. If the motorist on the through highway had to travel at such a speed that he could stop his car in time to avoid collisions with vehicles which ignore stop signs on intersecting roads, the purpose of having a through highway in the first place would be entirely thwarted. The driver who has the stop sign cannot assume the car on the through highway will stop. It is the other way around.’ “ Hale, 129 Ill.App.2d at 472–73, 263 N.E.2d 593 (quoting Hession v. Liberty Asphalt Products, Inc., 93 Ill.App.2d 65, 74, 235 N.E.2d 17 (1968)).

 

¶ 50 Further, the Hale court concluded that even in the light most favorable to defendant, the plaintiffs’ speed was not the proximate cause of the accident. “Whether the speed of plaintiffs’ automobile was 60 miles per hour or 70 miles per hour, the sole cause of the collision was the fact that defendant drove her automobile directly into the path of plaintiffs’ vehicle under circumstances that afforded plaintiffs no opportunity to avoid the collision.” Hale, 129 Ill.App.2d at 473, 263 N.E.2d 593.

 

“ ‘Violation of a law at the time of an accident by one connected with it is usually evidence of negligence, but there remains a question of fact whether the illegal act is the proximate cause of the injury. The mere fact, if it be a fact, that defendant in error was violating the law at the time he was injured will not bar his right to recover unless the unlawful act in some way proximately contributed to the accident in which he was injured. If the illegal act is a mere condition which made it possible for the accident to occur but is not itself a part of the accident it will not bar recovery.’ “ Hale, 129 Ill.App.2d at 474, 263 N.E.2d 593 (quoting Jeneary v. Chicago & Interurban Traction Co., 306 Ill. 392, 395, 138 N.E. 203 (1923)).

 

¶ 51 The Hale court noted that it was “mindful” of the weight given to jury verdicts, but found that the evidence did not support the verdicts.

 

“Whether they were swayed by sympathy for defendant because her minor son was killed in the collision, which plaintiffs claim resulted from the defendant’s improper emphasis at the trial, or by other factors, is immaterial. We think that the evidence in this case, when viewed in its aspects most favorable to the defendant, so overwhelmingly favor the plaintiffs that no verdict against the plaintiffs based on that evidence could ever stand, and the court should have granted plaintiffs’ motions for judgment notwithstanding the verdict.”   Hale, 129 Ill.App.2d at 475, 263 N.E.2d 593.

 

¶ 52 The court then reversed the jury’s verdict in favor of the defendant and remanded for a new trial on damages only. Hale, 129 Ill.App.2d at 476, 263 N.E.2d 593.

 

¶ 53 In Salo, the plaintiff argued that he, as the driver on the preferential highway, had a right to expect the driver on the secondary road to yield the right of way to him and that he did not proximately cause the accident. Salo, 181 Ill.App.3d at 642–43, 130 Ill.Dec. 272, 537 N.E.2d 339. The reviewing court agreed with the plaintiff and reversed the judgment apportioning 60% of the fault to the plaintiff because “[f]or the jury to attribute 60% of the fault to Salo under such circumstances [was] not only contrary to the manifest weight of the evidence, but also beyond comprehension and reason.” Salo, 181 Ill.App.3d at 644, 130 Ill.Dec. 272, 537 N.E.2d 339.

 

*13 “Whether or not the jury believed Salo should have exercised more caution under the circumstances of a flashing yellow light by possibly slowing down more or watching Singhurse’s car longer in order to sound his horn or swerve, any negligence on his part was not the proximate cause of the collision. Singhurse had a duty to stop and yield the right-of-way to approaching cars. Instead, she rolled into the intersection and hit Salo’s car after he was already in the intersection at a time when there was nothing he could do to avoid the collision. Salo could not reasonably be expected to anticipate Singhurse entering the intersection in disregard of her duty to yield. But for Singhurse running the stop sign or not looking, the collision would not have occurred. * * * If we were to follow the jury’s apportionment in this case, every time a driver on a preferential highway saw an approaching car on an intersecting road or drive, he essentially would be required to stop to make sure the other car obeyed the stop sign and stayed there or else be found negligent” Salo, 181 Ill.App.3d at 643–44, 130 Ill.Dec. 272, 537 N.E.2d 339.

 

¶ 54 In Johnson, the reviewing court reversed a jury’s verdict that the plaintiff was 50% contributorily negligent and found the defendant to be 100% negligent. There, the plaintiff was driving a tractor-trailer on the preferential highway when he was struck by the defendant’s truck crossing the intersection from a street with a stop sign. The court reasoned that under the defendant’s version of the facts, he stopped at the stop sign and then the plaintiff would have no reason to believe that the defendant would proceed into the intersection and not yield the right-of-way. There was nothing the plaintiff could reasonably have done to avoid the collision. Johnson, 223 Ill.App.3d at 484, 165 Ill.Dec. 828, 585 N.E.2d 224.

 

¶ 55 Similarly, in Coole, the court affirmed the trial court’s grant of summary judgment in favor of the defendants because the plaintiff’s decedent failed to yield the right-of-way to a garbage truck owned by the defendants. The court concluded that the plaintiff failed to provide any evidence “supporting an inference [the garbage truck driver] could have avoided the accident if he would have been driving slower, had been keeping a better lookout, or had applied the brakes.” Coole, 384 Ill.App.3d at 400, 323 Ill.Dec. 289, 893 N.E.2d 303. The court found that a reasonable jury could not find that the garbage truck driver’s breach of duty was a substantial cause of the accident and summary judgment was proper. Coole, 384 Ill.App.3d at 400–01, 323 Ill.Dec. 289, 893 N.E.2d 303.

 

¶ 56 The circumstances of the instant case are similar to those presented in Hale, Salo, Johnson, and Coole since they all involve collisions and the first three decisions involve accidents between a driver on a preferential highway and another driver on a nonpreferential road. They do in some measure support defendants’ argument on the issue of legal cause.

 

¶ 57 Plaintiffs cite the decision in Guy v. Steurer, 239 Ill.App.3d 304, 179 Ill.Dec. 1020, 606 N.E.2d 852 (1992), as support for their position that the duty of the intersecting driver to yield only arises when the oncoming driver constitutes an immediate hazard. There, the jury returned a verdict in favor of the defendant. Guy, 239 Ill.App.3d at 306–07, 179 Ill.Dec. 1020, 606 N.E.2d 852. On appeal, the plaintiff argued that his motion for judgment notwithstanding the verdict or motion for a new trial should have been granted by the trial court. The Guy court cited the Illinois Vehicle Code provision that requires: “a driver at a stop sign on a road intersecting with a preferential highway must yield the right-of-way to any vehicle approaching so closely on the highway that it constitutes an immediate hazard to his vehicle’s travel across the intersection.” Id., at 306, 179 Ill.Dec. 1020, 606 N.E.2d 852 (quoting Ill.Rev.Stat.1989, ch. 95 1/2, ¶ 11–904(b)). It then pointed out that “[t]his provision has not been construed to impose absolute liability upon a party approaching a stop sign on a nonpreferential road such that he must stop long enough to permit any car he observes on the highway to pass, regardless of its distance from the intersection.” (Emphasis added.) Guy, 239 Ill.App.3d at 307–08, 179 Ill.Dec. 1020, 606 N.E.2d 852 (citing Ill.Rev.Stat.1989, ch. 95 1/2, ¶ 11–904(b)). “Rather, the statute requires the motorist confronted by the stop sign to exercise reasonable care and proceed across the intersection after he has stopped and yielded the right-of-way to vehicles on the highway that constitute an ‘immediate hazard.’ “ Guy, 239 Ill.App.3d at 308, 179 Ill.Dec. 1020, 606 N.E.2d 852 (quoting Pennington v. McLean, 16 Ill.2d 577, 583, 158 N.E.2d 624 (1959)). Similarly, the driver on the preferential roadway does not have an absolute right to proceed through the intersection, but has a duty to exercise due care, keep a proper lookout, and drive as a prudent person would to avoid a collision. Guy, 239 Ill.App.3d at 308, 179 Ill.Dec. 1020, 606 N.E.2d 852.

 

*14 ¶ 58 The Guy court observed that there was “no precise formula” for determining whether a particular vehicle followed the duty imposed on it.   Guy, 239 Ill.App.3d at 308, 179 Ill.Dec. 1020, 606 N.E.2d 852. “The issue involves considerations as to the relative speeds and distances of the vehicles from the intersection and must be determined by the trier of fact.” Guy, 239 Ill.App.3d at 308, 179 Ill.Dec. 1020, 606 N.E.2d 852. The Guy court reasoned that the case did not involve an unavoidable collision because the plaintiff admitted that he observed the defendant cross four lanes of traffic, but failed to slow down or otherwise try to avoid the accident because he thought the defendant would stop. “[P]laintiff had an opportunity to avoid the collision by decreasing his speed, sounding his horn, or changing lanes. This is significant in that it bears on whether plaintiff observed his own duty to exercise due care in approaching and crossing the intersection and to drive as a prudent person would to avoid a collision when danger is discovered, or should have been discovered by the exercise of reasonable care.” Guy, 239 Ill.App.3d at 310, 179 Ill.Dec. 1020, 606 N.E.2d 852. The Guy court concluded that the evidence was sufficient for the jury to have found the plaintiff more than 50% negligent and bar any recovery. Guy, 239 Ill.App.3d at 310, 179 Ill.Dec. 1020, 606 N.E.2d 852.

 

¶ 59 Under all of the authority outlined above, Reeves and Chakonas each had duties to follow while approaching the intersection. A driver of a vehicle approaching an intersection with a stop sign has a duty to stop and after having stopped, to yield the right-of-way to any vehicle which has entered the intersection or is approaching so closely as to constitute an immediate hazard during the time the driver was in the intersection. Johnson, 223 Ill.App.3d at 483, 165 Ill.Dec. 828, 585 N.E.2d 224 (citing Ill.Rev.Stat.1987, ch. 95 1/2, ¶ 11–904(b)) FN3. Although the driver on a preferential highway has the right to expect that the vehicle approaching on the secondary roadway controlled by a stop sign will obey the stop sign and yield the right-of-way, the driver does not have an absolute right to proceed into the intersection. Rather, the preferential driver “has a duty to keep a proper lookout, observe due care in approaching and crossing intersections, and drive as a prudent person would to avoid a collision when danger is discovered or, by the exercise of reasonable care, should have been discovered.” Johnson, 223 Ill.App.3d at 484, 165 Ill.Dec. 828, 585 N.E.2d 224 (citing Salo, 181 Ill.App.3d at 643, 130 Ill.Dec. 272, 537 N.E.2d 339).

 

¶ 60 Differing testimony was presented regarding Reeves’ speed at the time of the accident. Plaintiffs’ experts opined that Reeves was traveling 49.5 miles per hour at the time of the collision while the defense expert concluded that Reeves was traveling 37 miles per hour. Reeves testified that he thought he was going between 40 to 45 miles per hour. The evidence regarding whether Reeves was fatigued and in violation of the 70–hour rule was also contested. Hess opined that Reeves had exceeded his 70 hours at the time of the accident according to the DDEC information and based on Hess’s own experience, Reeves would have been fatigued. Reeves testified that he was not over his hours and was not fatigued. Ayen, Reeves’ supervisor, also stated that he checked Reeves’ log prior to Reeves leaving on this delivery and he was not over 70 hours. Finally, plaintiffs asserted that Reeves could have taken evasive action to avoid the collision and that Reeves should have noticed Chakonas’ vehicle prior to impact. Reeves testified that he observed the Reid vehicle, but he did not see Chakonas’ vehicle until the impact.

 

*15 ¶ 61 Based on the evidence presented at trial, the jury could have concluded that Reeves’ speeding was a legal cause of the collision because it was reasonably foreseeable that a driver seeking to merge onto Route 30 from Lincoln Street might misjudge how long it would take the semitruck to reach the intersection. Further, the jury could have determined that, based upon the evidence, Reeves could have avoided the collision with the Chakonas vehicle. As noted, Reeves testified that he applied his brakes when he observed the Reid vehicle crossing the intersection; however, Rogers opined that Reeves only applied the semitruck’s brakes four seconds after impact with the Chakonas vehicle, and Brach testified that Reeves only applied the semitruck’s brakes three seconds after impact.

 

¶ 62 Additionally, the jury could have found that Reeves’ violation of the 70–hour rule at the time of the collision was also part of a legal cause of the accident. While we find the evidence to be extremely close on this issue and could have resulted in a verdict either for or against plaintiffs, it is not our function to reweigh the evidence. “ ‘[I]t is the province of the jury to resolve conflicts in the evidence, to pass upon the credibility of the witnesses, and to decide what weight should be given to the witnesses’ testimony.’ “ Velarde, 354 Ill.App.3d at 537, 289 Ill.Dec. 529, 820 N.E.2d 37 (quoting Maple v. Gustafson, 151 Ill.2d 445, 452, 177 Ill.Dec. 438, 603 N.E.2d 508 (1992)).

 

¶ 63 Given the contested evidence of speeding and fatigue, the jury could have concluded that the evidence supported a finding that Reeves was the legal cause of the collision.

 

[15] ¶ 64 Dean Foods additionally argues that it is entitled to a judgment notwithstanding the verdict because plaintiffs failed to prove that it was vicariously liable for the actions of Reeves. Specifically, Dean Foods claims that plaintiff failed to introduce evidence of any words or conduct by Dean Foods necessary to establish their actual agency/joint venture claims. Dean Foods contends plaintiffs failed to call any Dean Foods representative as a witness, but simply relied on the testimony of Reeves and other Alco and Alder employees, statements in the Alder driver’s manual, and evidence that the Dean Foods logo appeared on the truck tractor and trailer, on the uniforms of Alder and Alco employees, etc., to establish an agency relationship. We disagree.

 

[16][17][18] ¶ 65 An agency is a fiduciary relationship in which the principal has the right to control the agent’s conduct and the agent has the power to act on the principal’s behalf. Letsos v. Century 21–New West Realty, 285 Ill.App.3d 1056, 1064, 221 Ill.Dec. 310, 675 N.E.2d 217 (1996). An agent’s authority may be either actual or apparent, and actual authority may be either express or implied. C.A.M. Affiliates, Inc. v. First American Title Insurance Co., 306 Ill.App.3d 1015, 1021, 240 Ill.Dec. 91, 715 N.E.2d 778 (1999). “Only the alleged principal’s words and conduct, not those of the alleged agent, establish the agent’s authority.” Kaporovskiy v. Grecian Delight Foods, Inc., 338 Ill.App.3d 206, 210, 272 Ill.Dec. 453, 787 N.E.2d 268 (2003).

 

*16 [19][20] ¶ 66 Generally, the question of whether an agency relationship exists and the scope of the purported agent’s authority are questions of fact. Progress Printing Corp. v. Jane Byrne Political Committee, 235 Ill.App.3d 292, 306, 176 Ill.Dec. 357, 601 N.E.2d 1055 (1992). A principal-agent relationship exists when the principal has the right to control the manner in which the agent performs his work and the agent has the ability to subject the principal to liability. Lang v. Silva, 306 Ill.App.3d 960, 972, 240 Ill.Dec. 21, 715 N.E.2d 708 (1999).

 

[21][22] ¶ 67 Dean Foods correctly points out that “to establish the actual authority of an agent, the authority must be founded upon some word or act of the principal, not on the acts or words of the agent.” Wadden v. Village of Woodridge, 193 Ill.App.3d 231, 239, 140 Ill.Dec. 408, 549 N.E.2d 1280 (1990). However, our Illinois Supreme Court has cautioned that this principle “is not to be confused with the rule which permits an alleged agent to be called as a witness for the purpose of establishing the existence of an agency.” City of Evanston v. Piotrowicz, 20 Ill.2d 512, 519, 170 N.E.2d 569 (1960). As the supreme court explained in Piotrowicz:

 

“Agency may be established and its nature and extent shown by parol evidence, whether direct or circumstantial, and reference may be had to the situations of parties and property, acts of the parties, and other circumstances germane to the question, and if the evidence shows one acting for another under circumstances implying knowledge on the part of the supposed principal of such acts, a prima facie case of agency is established.” Piotrowicz, 20 Ill.2d at 518, 170 N.E.2d 569.

 

[23] ¶ 68 “The existence of an agency relationship may be established by circumstantial evidence, including the situation of the parties, their acts and other relevant circumstances.” Prodromos v. Everen Securities, Inc., 341 Ill.App.3d 718, 724–25, 275 Ill.Dec. 671, 793 N.E.2d 151 (2003).

 

¶ 69 Here, the evidence was sufficient to establish that Dean Foods had the right to control the actions of Alder/Alco’s drivers. At the time of the collision, the relationship between Dean Foods and Alder/Alco had been in place for 60 years, and Alder/Alco “pulled” exclusively for Dean Foods. In 2000, Alder received the “Partners in Distribution Award” from Dean Foods. White, “Alder and Alco’s” assistant safety director and driver trainer at the time of the collision, testified that he used letterhead that bore Dean Foods insignia with the notation “distributor of Dean Foods” in the performance of his job, including the reprimand of drivers. The “Alder Companies Driving Manual,” which was admitted into evidence without objection, states that Alder/Alco drivers were part of Dean Foods’ fleet and instructs the drivers to wear Dean Foods clothing and act in a manner that will encourage positive opinions about Dean Foods. In particular, the manual states “When you step out of your truck, you are immediately recognized as DEAN FOODS.” Perhaps most importantly, Dean Foods owned the loaded trailer which Reeves was “pulling” at the time of the collision.

 

*17 [24] ¶ 70 Despite the foregoing, Dean Foods argues that the evidence established, as a matter of law, that Alder/Alco had sole control over Reeves’ driving and that Dean Foods exercised no such control. Dean Foods mistakenly relies on the fact that it chose not to exercise its right to control the Alder/Alco drivers. However, it is the right or duty to supervise and control, not the exercise of the right, that determines whether an agency exists.   Lang, 306 Ill.App.3d at 972, 240 Ill.Dec. 21, 715 N.E.2d 708.

 

¶ 71 The cases cited by Dean Foods in support of its argument are distinguishable. In Daniels v. Corrigan, 382 Ill.App.3d 66, 320 Ill.Dec. 124, 886 N.E.2d 1193 (2008), this court considered whether a principal-agency relationship existed between the owner of a taxicab and Yellow Cab Affiliation Company. A City of Chicago ordinance required all taxicab medallion owners to be affiliated with a taxicab affiliation licensed by the city, but the affiliation agreement signed by the taxicab owner expressly provided that the owner was an independent contractor and that the affiliation agreement did not create an agency or joint venture. Daniels, 382 Ill.App.3d at 77–78, 320 Ill.Dec. 124, 886 N.E.2d 1193. This court found that there was no conduct which, irrespective of the express agreement, would give rise to an agency-principal relationship. The taxicab owner set the hours of operation and paid all the expenses for the taxicab, was free to decide which fares to pick and was under no obligation to report any fares to the affiliation. The presence of an express agreement disclaiming an agency or joint venture is not present in the case at bar.

 

¶ 72 The circumstances involved in Trzaska v. Bigane, 325 Ill.App. 528, 60 N.E.2d 264 (1945), and Shoemaker v. Elmhurst–Chicago Stone Co., 273 Ill.App.3d 916, 210 Ill.Dec. 61, 652 N.E.2d 1037 (1994), also cited by Dean Foods are likewise factually distinguishable. Trzaska involved a truck owner/driver who occasionally delivered coal for a coal company. The coal company hired the driver on an as-needed basis and he was free to refuse to haul any load. He delivered the coal where he was instructed to deliver it and collected money for the load when he was requested to do so. The court found that the evidence showed that the coal company had no control over the driver.   Trzaska, 325 Ill.App. at 534, 60 N.E.2d 264.

 

¶ 73 In Shoemaker, relying in part on Trzaska, the court found that a driver was not the agent of the stone company whose products he hauled on behalf of the trucking company that leased the truck he operated. The court rejected the argument that instructing the driver where to take the load constituted control of the driver, and concluded that the driver was an independent contractor in the absence of any other evidence of control.   Shoemaker, 273 Ill.App.3d at 922, 210 Ill.Dec. 61, 652 N.E.2d 1037.

 

¶ 74 The cases cited by Dean Foods do not support the contention that under the facts presented here there was no agency relationship between Dean Foods and Reeves. The evidence showed that Dean Foods had the right to control the actions of Alco’s drivers. At the time of the collision, the relationship between Dean Foods and Alder/Alco had been in place for 60 years, and Alder/Alco “pulled” exclusively for Dean Foods. In 2000, Alder received the “Partners in Distribution Award” from Dean Foods. White, “Alder and Alco’s” assistant safety director and driver trainer at the time of the collision, testified that he used letterhead that bore Dean Foods insignia with the notation “distributor of Dean Foods” in the performance of his job, including the reprimand of drivers. The “Alder Companies Driving Manual,” which was admitted into evidence without objection, states that Alder/Alco drivers were part of Dean Foods’ fleet and instructs the drivers to wear Dean Foods clothing and act in a manner that will encourage positive opinions about Dean Foods. In particular, the manual states “When you step out of your truck, you are immediately recognized as DEAN FOODS.” Again, and perhaps most importantly, Dean Foods owned the loaded trailer which Reeves was “pulling” at the time of the collision.

 

*18 ¶ 75 Accordingly, the trial court did not err in denying defendants’ motions for judgment notwithstanding the verdicts on the issue of legal cause and the issue of Dean Foods’ agency.

 

[25][26][27][28] ¶ 76 However, we conclude the evidence at trial failed to establish the existence of a joint venture between Dean Foods and Alder, Alco, and Reeves. “A joint venture is defined as ‘an association of two or more persons to carry out a single enterprise for profit.’ “ Thompson v. Hiter, 356 Ill.App.3d 574, 582, 292 Ill.Dec. 362, 826 N.E.2d 503 (2005). Like the existence of an agency relationship, the existence of a joint venture may be inferred from the circumstances and does not require a formal agreement.   Thompson, 356 Ill.App.3d at 582, 292 Ill.Dec. 362, 826 N.E.2d 503. The factors to be considered in determining whether a joint venture exists include: (1) a community of interest in the purpose of the joint association; (2) a right of each member to direct and govern the policy or conduct of the other members; (3) a right to joint control and management of the property used in the enterprise; and (4) a sharing in both profit and losses. Thompson, 356 Ill.App.3d at 582, 292 Ill.Dec. 362, 826 N.E.2d 503. “In the absence of any one of the elements, a joint venture does not exist.” Daniels, 382 Ill.App.3d at 80, 320 Ill.Dec. 124, 886 N.E.2d 1193.

 

¶ 77 Although the evidence showed that Alco/Alder was a distributor of Dean Foods, the evidence did not show that Dean Foods shared its profits and losses with Alco/Alder. As previously discussed, none of the trial witnesses were representatives of Dean Foods. Therefore, the only evidence relating to the existence of a joint venture was testimony from Alco/Alder employees. However, none of the witnesses at trial gave any testimony indicating that profits and losses were shared among the companies. No other circumstantial evidence was admitted to prove this element. Without evidence that Dean Foods and Alco/Alder shared profits and losses, then as a matter of law, a joint venture could not be found. We also question whether the evidence at trial was sufficient to establish that Alco/Alder had the right to direct and govern Dean Foods’ policy or conduct. Since the absence of one element negates the existence of joint venture, Dean Foods was entitled to a judgment notwithstanding the verdict as to the finding of a joint venture. venture.FN4

 

[29][30] ¶ 78 Defendants also claim that the jury’s verdicts were contrary to the manifest weight of the evidence due to the lack of evidence of proximate cause, and thus they are entitled to a new trial. Dean Foods also contends it is entitled to a new trial on the issue of agency. “On a motion for a new trial, the court, after weighing the evidence, will set aside the verdict and order a new trial ‘ “if the verdict is contrary to the manifest weight of the evidence.” ‘ “ Lazenby v. Mark’s Construction, Inc., 236 Ill.2d 83, 100–01, 337 Ill.Dec. 884, 923 N.E.2d 735 (2010) (quoting Maple, 151 Ill.2d at 454, 177 Ill.Dec. 438, 603 N.E.2d 508, quoting Mizowek v. De Franco, 64 Ill.2d 303, 310, 1 Ill.Dec. 32, 356 N.E.2d 32 (1976)). “A verdict is against the manifest weight of the evidence ‘ “where the opposite conclusion is clearly evident or where the findings of the jury are unreasonable, arbitrary and not based upon any of the evidence.” [Citations.]’ “ Lazenby, 236 Ill.2d at 101, 337 Ill.Dec. 884, 923 N.E.2d 735 (quoting Maple, 151 Ill.2d at 454, 177 Ill.Dec. 438, 603 N.E.2d 508).

 

*19 ¶ 79 Based upon our review of the evidence already outlined above, we cannot say the verdicts are against the manifest weight on the questions of proximate cause and Dean Foods’ agency. Accordingly, the trial court did not err in denying defendants’ motions for a new trial on these issues.

 

¶ 80 We next consider whether the remaining defendants were denied a fair trial when the trial court admitted evidence of the prior bad acts of Reeves, Alco and Alder. Specifically, defendants argue that there was no proper purpose for informing the jury that (1) Reeves was speeding on days prior to the accident; (2) Reeves and Alder violated federal trucking regulations several weeks and months prior to the accident; (3) Reeves had been found guilty of falsifying driving logs prior to the accident; and (4) Reeves and Alder had been fined by the federal government after an audit for misconduct that occurred prior to the accident. Defendants assert that the admission of this evidence was erroneous, highly prejudicial, and warrants the granting of a new trial.

 

¶ 81 Plaintiffs maintain that the evidence of prior bad acts was properly admitted because the evidence of earlier log violations demonstrated Alco’s knowledge in scheduling Reeves for long runs. According to plaintiffs, Alco “implicitly” approved of Reeves’ driving time violations. Plaintiffs assert that the evidence was properly admitted to show absence of mistake that the violation was not accidental. Plaintiffs also argue that defense counsel opened the door to the admission of this evidence by stating in opening statements that the evidence would show that “he wasn’t falsifying his logs.”

 

¶ 82 Defendants filed two motions in limine to exclude evidence of prior bad acts. Prior to trial, the trial court granted defendants’ motion in limine to exclude evidence of Reeves’ prior traffic tickets for speeding. Later, prior to the introduction of evidence at trial, defendants filed a motion in limine to “exclude evidence of prior log violations.” Defendants stated that Reeves was cited for a logbook violation prior to the accident, but they sought to exclude this evidence because the prior violation was irrelevant to the issues at trial and any probative value would have been substantially outweighed by undue prejudice. The defendants also argued that the logbook violation could not be used for impeachment purposes.

 

¶ 83 In response, plaintiffs Powell and Kakidas asserted that Reeves was only cited for the logbook violation one month prior to the accident. They noted that he was specifically cited for “false reports of record of duty status” and his company was fined $10,000. Plaintiffs also argued that defense counsel opened the door for this evidence by stating in opening statements that Reeves “wasn’t falsifying his logs.” Plaintiffs claimed that the logbook violation was relevant to Reeves’ credibility because it demonstrated his dishonesty and desire to conceal facts which ought to be reported. According to plaintiffs, this violation was a crime of dishonesty. Plaintiffs additionally claimed that the logbook violation gave his employer notice that Reeves was routinely driving over the speed limit and over his hours-of-service, such that it was incumbent on defendants not to schedule Reeves for runs near 500 miles.

 

*20 ¶ 84 Following argument, the trial court denied the defendants’ motions in limine and allowed the admission of the prior logbook violation into evidence. The court found that “it is something a little bit more than a traffic citation. It is an affirmative act on the part of Mr. Reeves or was a part in the act Mr. Reeves and some * * * action was taken in the form of a fine for a substantial amount and it did happen in close proximation to the accident.” The court also noted that defense counsel “did make an affirmative statement during the course of [his] opening statement that requires them to bear a response.” The court held that the evidence was relevant and probative. Defense counsel objected to the admission of the prior violation and stated that he would make a continuing objection at trial.

 

¶ 85 Additionally, prior to trial, defense counsel also moved to bar the testimony of Donald Hess, plaintiffs’ expert. Hess was to testify as an expert on negligent hiring and supervision as well as to the logs and federal regulations kept for a trucking company. Defendants argued that Hess’s testimony would have been duplicative because Alco admitted that Reeves was its employee. According to defendants, any negligence by Reeves would be imputed to his employer and reviewing federal logs was unnecessary. In response, plaintiffs contended that the federal violations were relevant because they had set forth allegations that Alco and Alder had violated federal safety regulations and those violations involved the employer’s conduct and responsibility. According to plaintiffs, Hess had extensive experience with the federal regulations and he would “assist the jury in understanding how these regulations apply to real life and that the obligations of Alco and Alder are separate and distinct from the supervisory obligations over Mr. Reeves.” The trial court denied the motion to bar Hess’ testimony, but indicated that it would revisit the issue if the testimony became duplicative regarding negligent hiring.

 

¶ 86 Defendants then sought to exclude specific opinions of Hess, as set forth in his deposition. Defendants argued that there was no causal connection between any sort of logbook issue and why this accident happened. The court allowed, over defendants’ objection, the admission of Hess’s opinions that Alco and Alder encouraged Reeves to violate federal requirements and to drive in excess of the speed limit.

 

[31] ¶ 87 “Where it appears that an error did not affect the outcome below, or where the court can see from the entire record that no injury has been done, the judgment or decree will not be disturbed.” Both v. Nelson, 31 Ill.2d 511, 514, 202 N.E.2d 494 (1964); see also Sbarboro v. Vollala, 392 Ill.App.3d 1040, 1057, 331 Ill.Dec. 732, 911 N.E.2d 553 (2009). “But where the case is a close one on the facts, and the jury might have decided either way, any substantial error which might have tipped the scales in favor of the successful party calls for reversal.” Both, 31 Ill.2d at 514, 202 N.E.2d 494; Sbarboro, 392 Ill.App.3d at 1057, 331 Ill.Dec. 732, 911 N.E.2d 553.

 

*21 [32][33] ¶ 88 “It is axiomatic that ‘[e]vidence of specific prior bad acts unrelated to a material issue is prohibited.’ “ Timothy Whelan Law Associates, Ltd. v. Kruppe, 409 Ill.App.3d 359, 369, 349 Ill.Dec. 729, 947 N.E.2d 366 (2011) (quoting Sharma v. Zollar, 265 Ill.App.3d 1022, 1025 n. 4, 202 Ill.Dec. 868, 638 N.E.2d 736 (1994)). “The law concerning the admissibility of a defendant’s prior acts of misconduct in a criminal prosecution is fairly well established. Such evidence is inadmissible if introduced merely to establish the defendant’s propensity to commit crime.” Thompson v. Petit, 294 Ill.App.3d 1029, 1034, 229 Ill.Dec. 387, 691 N.E.2d 860 (1998) (citing People v. Thingvold, 145 Ill.2d 441, 452, 164 Ill.Dec. 877, 584 N.E.2d 89 (1991)). See also Wernowsky v. Economy Fire & Casualty Co., 106 Ill.2d 49, 53, 87 Ill.Dec. 484, 477 N.E.2d 231 (1985). “Propensity evidence is not rejected because it is irrelevant; ‘on the contrary, it is said to weigh too much with the jury and to so overpersuade them as to prejudice one with a bad general record and deny him a fair opportunity to defend against a particular charge.’ “ Thompson, 294 Ill.App.3d at 1034, 229 Ill.Dec. 387, 691 N.E.2d 860 (quoting Michelson v. United States, 335 U.S. 469, 475–76, 69 S.Ct. 213, 93 L.Ed. 168 (1948)). However, evidence of prior bad acts may be admitted if relevant to prove modus operandi, intent, identity, motive, absence of mistake, or any material question other than the propensity to commit crime.   Thompson, 294 Ill.App.3d at 1034–35, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

[34][35] ¶ 89 “Although not expressed in exactly the same terms, Illinois has long subscribed to a similar rule in civil cases. The admission of evidence of prior similar tortious or wrongful conduct to establish purpose, intent, motive, knowledge or other mental state of a party to a civil action forms an exception to the general rule which prohibits proof of one wrongful act by evidence of the commission of another such act.” Thompson, 294 Ill.App.3d at 1035, 229 Ill.Dec. 387, 691 N.E.2d 860. “ ‘Evidence of misconduct other than that in issue is not properly admissible to establish a person’s disposition to behave in a certain way.’ “ Kruppe, 409 Ill.App.3d at 369, 349 Ill.Dec. 729, 947 N.E.2d 366 (quoting Plooy v. Paryani, 275 Ill.App.3d 1074, 1089, 212 Ill.Dec. 317, 657 N.E.2d 12 (1995)).

 

[36][37] ¶ 90 Further, “the fact that evidence of prior acts of misconduct may be relevant to prove something other than propensity does not mean that such evidence should be admitted as a matter of course. Trial judges must still determine whether the danger of ‘unfair prejudice’ to the defendant ‘substantially’ outweighs the probative value of the prior-act evidence.”   Thompson, 294 Ill.App.3d at 1036, 229 Ill.Dec. 387, 691 N.E.2d 860 (citing People v. Illgen, 145 Ill.2d 353, 375–76, 164 Ill.Dec. 599, 583 N.E.2d 515 (1991)). “Such a determination is a matter committed to the sound discretion of the trial judge, and we will not reverse the court’s resolution of the question absent a clear abuse of that discretion.” Thompson, 294 Ill.App.3d at 1036, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

¶ 91 In Kruppe, the plaintiff filed a breach of contract action against the defendant in an attempt to collect fees owed for its representation of the defendant. The plaintiff had previously represented the defendant in shareholder litigation based on the defendant’s involvement in two corporations. The defendant terminated the plaintiff’s representation in favor of a new attorney and a dispute arose over payment of attorney fees. Following a jury trial, the jury awarded the plaintiff $30,330.14 and the trial court increased the award for a total of $50,000. Kruppe, 409 Ill.App.3d at 361, 349 Ill.Dec. 729, 947 N.E.2d 366.

 

*22 ¶ 92 One of the issues raised on appeal was whether the trial court erred in allowing the plaintiff to present evidence of the defendant’s alleged failure to pay other professionals for their services, specifically a fee petition filed by another law firm. The defendant objected to its admission, but the trial court found the evidence relevant as to the defendant’s credibility and his course of conduct. The court admitted the evidence.   Kruppe, 409 Ill.App.3d at 368–69, 349 Ill.Dec. 729, 947 N.E.2d 366.

 

¶ 93 The Kruppe court concluded that the trial court abused its discretion in admitting the evidence as a course of conduct. Kruppe, 409 Ill.App.3d at 369, 349 Ill.Dec. 729, 947 N.E.2d 366. It held that “the only possible relevance we see for this evidence is to impugn defendant’s character in an attempt to show that he acted in conformity therewith when he allegedly declined to pay plaintiff for its services. That, however, is not a permissible purpose for admitting such evidence.” Kruppe, 409 Ill.App.3d at 370, 349 Ill.Dec. 729, 947 N.E.2d 366.

 

“In criminal cases, the danger that evidence of other bad acts is likely to overpersuade the fact finder and lead to a conviction by causing the fact finder to dislike the defendant is well recognized. E.g., People v. Manning, 182 Ill.2d 193, 213–14, 230 Ill.Dec. 933, 695 N.E.2d 423 (1998); People v. Hensley, 354 Ill.App.3d 224, 232, 289 Ill.Dec. 474, 819 N.E.2d 1274 (2004). The same danger is present here. Thus, the trial court abused its discretion in permitting the admission of this evidence.” Kruppe, 409 Ill.App.3d at 370, 349 Ill.Dec. 729, 947 N.E.2d 366.

 

¶ 94 Plaintiffs rely on a federal district court decision, Trotter v. B & W Cartage Co., No. 05–cv–0205, 2006 WL 1004882 (S.D.Ill.2006), to support their position that the evidence of prior log violations was properly admitted. Plaintiffs assert that the district court in Trotter admitted evidence of prior “faked” logs because “it tended to prove that the trucking company operated with conscious indifference to its federal mandated duty and also because its behavior sent a message to the drivers that violating hours of service regulations was acceptable.” However, the district court in Trotter did not consider the propriety of the admission of prior “faked” logs in a jury trial for negligence, but was reviewing the defendants’ motion for summary judgment on a request for punitive damages filed by plaintiffs against the defendant trucking company. Trotter, 2006 WL 1004882, at *1.

 

¶ 95 The district court noted that the deposition testimony revealed the trucking company’s method for reviewing the logs was inadequate for the last five to seven years, the managers would regularly schedule drivers with minimal time for breaks, and that “[m]oney took precedent [sic ] over safety.”   Trotter, 2006 WL 1004882, at *5–7. The court also found that the evidence showed a pattern of “conscious indifference” to the federal regulations.   Trotter, 2006 WL 1004882, at *7. As a result, the district court denied the defendants’ motion for summary judgment because reasonable jurors could find that the imposition of damages based on aggravating circumstances was warranted.

 

*23 ¶ 96 Plaintiffs’ reliance on Trotter is misplaced, because in that case plaintiffs were seeking punitive damages and would have to prove the trucking company’s knowing or conscious disregard of the federal regulations at trial in order to recover those special damages. The question of whether the court should have allowed introduction of prior log violations evidence was never visited by the court.

 

¶ 97 In Thompson, the reviewing court affirmed the admission of prior bad acts at trial because the defendant’s mental state was an issue at trial. There, the plaintiff filed a negligence action against the defendant following an incident in which the parties repeatedly cut each other off and stopped their vehicles in front of the other on the Eisenhower Expressway which culminated in the defendant shooting the plaintiff twice. At trial, the defendant raised two affirmative defenses, contributory negligence and self-defense, arguing that he shot the plaintiff after the plaintiff and his passenger approached him while armed with a baseball bat and a tire iron and began to strike him. Illinois recognizes the doctrine of self-defense as a defense in both criminal and civil cases. The trial court admitted evidence of a similar incident in which the defendant also displayed a gun after cutting another driver off on a highway. Thompson, 294 Ill.App.3d at 1031–34, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

¶ 98 On appeal, the reviewing court observed that “[b]y bringing his cause of action grounded in allegations of negligence, the plaintiff in this case obviated the need to plead or prove the defendant’s motive or intent as he would have been obliged to do had he chosen to seek recovery for a battery.”   Thompson, 294 Ill.App.3d at 1035–36, 229 Ill.Dec. 387, 691 N.E.2d 860. “However, by pleading self-defense as an affirmative defense to the plaintiff’s action, the defendant introduced his mental state as an issue in controversy, as self-defense necessarily involves the question of the defendant’s subjective belief and intent at the time of the incident.” Thompson, 294 Ill.App.3d at 1036, 229 Ill.Dec. 387, 691 N.E.2d 860. The reviewing court found the witness’s testimony about the defendant’s prior bad acts to be relevant to the defendant’s state of mind and intent when he shot the plaintiff and also whether the defendant introduced the gun as a measure of self-defense or “an instrument of aggression.” Thompson, 294 Ill.App.3d at 1036, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

¶ 99 However, the Thompson court recognized that the trial court must still determine whether the probative value of the prior bad acts substantially outweighed the prejudicial effect. The reviewing court held that the trial court did not abuse its discretion in admitting the evidence of prior bad acts. The court determined that “the risk of unfair prejudice to the defendant was minimal in comparison to its probative worth” and the witness testimony was relevant to the issue of the defendant’s state of mind, especially given the high degree of similarity between the road encounters. Thompson, 294 Ill.App.3d at 1038, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

*24 ¶ 100 In contrast with Thompson, Reeves’ mental state at the time of the accident was not a question before the jury. Plaintiffs had filed a negligence action against defendants and no affirmative defense placed Reeves’ mental state at issue. Thus, plaintiffs were not required to prove the defendants’ motive, intent, or knowledge. See Thompson, 294 Ill.App.3d at 1035–36, 229 Ill.Dec. 387, 691 N.E.2d 860.

 

¶ 101 As in Kruppe, the same danger of overpersuasion was present in this case, given the circumstances of the accident and closeness of the evidence. The cases we previously reviewed, Salo, Hale, Johnson, Coole, and Steurer, all illustrate that the facts of this case were extremely close and the jury could have decided either way. Similar to Hale, in which the defendant’s young son was killed, and the reviewing court expressed concern that the jury may have been swayed by sympathy (see Hale, 129 Ill.App.2d at 475, 263 N.E.2d 593), this case involved the tragic and untimely deaths of three young people due to a traffic collision involving an allegedly fatigued, speeding truck driver carrying some 80,000 pounds of milk product. Given these highly charged facts, the admission of the prior bad acts of speeding and log falsifications required a careful weighing of the probative value of this evidence against the prejudicial impact it would have had upon the fact finder, which we find was not done in this case. In the instant case, plaintiffs’ wrongful death actions were based upon negligence claims. Reeves’ prior bad acts had no connection to the question of whether he was negligent at the time of the accident. There was no claim for an intentional tort or punitive damages to merit the introduction of the prior log violations. Contrary to plaintiffs’ argument, the introduction of prior misconduct was not used for any proper purpose.

 

[38] ¶ 102 Further, the evidence of the prior bad acts, i.e., prior speeding, prior violation of federal regulations, and the $10,000 fine, had no purpose other than to allow the inference that defendants acted badly at the time of the accident because they had done so prior to the accident. The record fails to establish that the evidence of prior bad acts was offered for an admissible purpose, such as purpose, intent, motive, knowledge or other mental state. As previously noted, the intent, mental state, or knowledge of any of the defendants was not at issue in this negligence action.

 

[39] ¶ 103 We also disagree with plaintiffs’ assertion that the evidence of prior bad acts was admissible because during opening statements defense counsel stated that Reeves “wasn’t falsifying his logs.” Plaintiffs contend that this statement opened the door to evidence that Reeves had previously falsified his logs. Defendants maintain that the comment was not referring to prior log entries, but was discussing his log for the week of the accident. Defendants do not dispute the admissibility of evidence relating to Reeves’ logs for the week of the accident and the 70–hour rule.

 

*25 ¶ 104 Plaintiffs cited Young v. Rabideau, 821 F.2d 373, 380 (7th Cir.1987), and Hamrock v. Henry, 222 Ill.App.3d 487, 494–95, 165 Ill.Dec. 25, 584 N.E.2d 204 (1991), to support their argument that the comment in opening statements opened the door for the admission of the prior bad acts. However, in both of those cases, the plaintiffs opened the door for additional evidence during their own testimony. See Young, 821 F.2d at 380 (prisoner’s testimony that he grabbed a guard’s chain by reflex opened the door for the prison guards to contradict this testimony with his prior prison disciplinary record); Hamrock, 222 Ill.App.3d at 494–95, 165 Ill.Dec. 25, 584 N.E.2d 204 (plaintiff opened the door for defendants to question her about her collateral source of pension funds when she testified that she was referred to a physician by the pension board). Plaintiffs have not cited any authority in which an attorney’s comment in opening statements made inadmissible evidence relevant and admissible.

 

[40][41] ¶ 105 Moreover, the evidence of prior bad acts was not admissible to show a “crime of dishonesty.” “In Illinois a witness’s credibility may not be impeached by inquiry into specific acts of misconduct which have not led to a criminal conviction.” Podolsky & Associates L.P. v. Discipio, 297 Ill.App.3d 1014, 1026, 232 Ill.Dec. 98, 697 N.E.2d 840 (1998) (citing People v. West, 158 Ill.2d 155, 162–64, 198 Ill.Dec. 393, 632 N.E.2d 1004 (1994)). Here, the prior log violations and the subsequent fine did not lead to a criminal conviction, but only a finding of a violation of federal regulations and were not admissible for purposes of impeachment.

 

[42] ¶ 106 Because the case was close on the facts and the jury could have decided either way, we cannot say that the error did not affect the jury’s verdict. Whether Reeves was speeding and whether he was fatigued were two of the most hotly contested issues in the case. As to speeding, the plaintiffs’ experts opined that Reeves was traveling at 49.5 miles per hour at impact. However, the defendant’s expert testified that Reeves was driving at a speed of 41.5 miles per hour just prior to the collision and at 37 miles per hour at impact. The speed of Reeves’ truck was a crucial fact determination and the introduction of this inadmissible evidence of speeding on dates prior to the accident was not harmless.

 

¶ 107 On the issue of fatigue, Reeves testified that he was not fatigued and the initial responding officer testified that he did not notice that Reeves was fatigued. In contrast, Hess opined that Reeves was fatigued based in part on the log evidence from the relevant time that showed Reeves was driving more than the 70 hour rule allowed. The evidence of the fine was also unfairly prejudicial because it carried with it the imprimatur of the government. The wrongful admission of the prior log falsifications and fine were not harmless errors.

 

¶ 108 The dissent relies on several cases from other jurisdictions to support the admission of a truck driver’s logs in negligence cases. However, all of the cases cited in the dissent involved the issue of punitive damages in which the truck driver and/or his employer’s state of mind was at issue to prove a wanton disregard for the safety of others or intentional misconduct. Further, these cases can be factually distinguished from the circumstances present in this case.

 

*26 ¶ 109 In Torres v. North American Van Lines, Inc., 135 Ariz. 35, 658 P.2d 835 (1992), the plaintiffs’ decedent was killed when a truck driven by a North American driver struck the rear end of the decedent’s vehicle while parked in the emergency lane of the freeway. The driver’s logs, including his repeated failure to include one item, was admitted at trial on the issue of gross negligence for punitive damages and the reviewing court found that the jury could have concluded “this manifested a wanton disregard for the safety of others, that is, gross negligence.” Torres, 135 Ariz. at 39, 658 P.2d 835.

 

¶ 110 In Purnick v. C.R. England, Inc., 269 F.3d 851 (7th Cir.2001), the Seventh Circuit was reviewing the district court’s grant of summary judgment in favor of the defendants on the issue of punitive damages. There, the defendants’ truck driver rear-ended the plaintiff, stating that he had been “ ‘mesmerized’ “ by the road prior to impact. The plaintiff’s experts asserted that the driver had falsified his logs. However, the reviewing court held that the plaintiff had failed to meet her burden “by clear and convincing evidence that the defendant engaged in conscious and intentional misconduct that he knew would probably result in injury,” finding that even if the driver falsified his logs and was fatigued, he did not know that his actions would result in injury. Purnick, 269 F.3d at 852.

 

¶ 111 In Librado v. M.S. Carriers, Inc., 2004 WL 1490304 (N.D.Tex.2004), the district court denied the defendants’ partial motion for summary judgment on the issue of gross negligence. In that case, the truck driver ran a stop sign while looking at a map and struck the vehicle driven by the plaintiffs’ decedent and another passenger. The defendant trucking company admitted liability for negligence and negligence per se, but only contested the claim of gross negligence. Librado, at *1. Under Texas law, “[e]vidence of simple negligence is not enough to prove either the objective or subjective elements of gross negligence.” Librado, at *2. The district court found a question of material fact on the issue of gross negligence and that the driver’s prior log violations were relevant to the employers’ knowledge and failure to discipline, “consciously indifferent to the effect on others.” Librado, at *4.

 

¶ 112 In Briner v. Hyslop, 337 N.W.2d 858 (Ia.1983), the truck driver was intoxicated, fell asleep while driving and his truck drifted over the center line, striking the vehicle driven by the plaintiff’s decedent. After a trial, the jury entered awards of compensatory and punitive damages against both defendants, but the trial court entered a judgment notwithstanding the verdict as to the award of punitive damages against the defendant employer. On appeal, the Iowa Supreme Court reversed and remanded for a new trial on the issue of punitive damages, finding that it was a jury question as to whether the employer failed to supervise and disregarded the drivers’ actions of driving excessive hours without sufficient rest. Briner, 337 N.W.2d at 867–68.

 

*27 ¶ 113 In Smith v. Printup, 254 Kan. 315, 866 P.2d 985 (1993), the defendant driver was driving a moving van when he lost control, the vehicle jack-knifed, crossed the median and struck the vehicle driven by plaintiffs’ decedents. On appeal, the Kansas Supreme Court held that the trial court erred in excluding evidence that the defendant employer knowledge of the driver’s history of log falsification and other service violations from the jury’s determination of punitive damages and remanded for further proceedings on punitive damages. Smith, 254 Kan. at 346–48, 866 P.2d 985.

 

¶ 114 In Elbar, Inc. v. Claussen, 774 S.W.2d 45 (Tex.Ct.App .1989), the appellees’ decedent lost control of his motorcycle and died after a truck driven by the appellants’ driver crossed into the decedent’s lane of traffic. The reviewing court held that the employer’s noncompliance with federal regulations was properly admitted for the jury’s determination of gross negligence. Elbar, 774 S.W.2d at 51.

 

¶ 115 In Came v. Micou, 2005 WL 1500978 (M.D.Penn.2005), the district court considered the partial motion for summary judgment filed by the defendants regarding the issues of punitive damages. There, the plaintiff alleged that the defendant trucking company’s tractor-trailer operated by the defendant driver rear-ended the tractor-trailer operated by the plaintiff. The court found a genuine issue of material fact existed as to whether the defendant driver violated the federal regulations, including “whether Defendants’ conduct was so outrageous as to warrant an award of punitive damages in this case.” Came, at *5.

 

¶ 116 None of these cited cases involved a truck driver on a preferential highway colliding with a driver crossing from a non-preferential road. In each case, the defendant truck driver was clearly at fault for the accident. Each of these cases involved a determination of punitive damages in which the defendants’ knowledge and state of mind was at issue. Such a determination is not present in this case because plaintiffs alleged survival and wrongful death counts in negligence, and no claim for punitive damages was raised. Moreover, the question of whether to allow evidence of prior bad acts on a negligence count was never addressed in these cases. Further, we point out that Reeves’ driving logs for the week of the accident were properly admitted and that has not been challenged on appeal.

 

¶ 117 We conclude that the improper admission of the evidence of prior bad acts, specifically the prior speeding, prior log violations, and prior fine occurring weeks and months before the accident were substantial errors that may have tipped the scales in favor of plaintiffs. Accordingly, we find that the trial court abused its discretion in admitting the evidence of prior bad acts, we reverse the judgments in plaintiffs’ favor and we remand for a new trial without the use of the improperly admitted evidence.

 

[43] ¶ 118 Defendants also assert that the trial court abused its discretion in giving the “careful habits” instruction after plaintiffs admitted that Chakonas was at least 25% of the proximate cause of the accident. Plaintiffs respond that the instruction was properly given because they had presented evidence that Chakonas was a person of careful habits and none of the witnesses at trial testified as to the complete movement of Chakonas’ car from the stop sign and into the intersection.

 

*28 [44][45][46][47] ¶ 119 “In Illinois, the parties are entitled to have the jury instructed on the issues presented, the principles of law to be applied, and the necessary facts to be proved to support its verdict .” Dillon v. Evanston Hospital, 199 Ill.2d 483, 505, 264 Ill.Dec. 653, 771 N.E.2d 357 (2002). “The trial court has discretion to determine which instructions to give the jury and that determination will not be disturbed absent an abuse of that discretion.” Schultz v. Northeast Illinois Regional Commuter R.R. Corp., 201 Ill.2d 260, 273, 266 Ill.Dec. 892, 775 N.E.2d 964 (2002). “A reviewing court ordinarily will not reverse a trial court for giving faulty instructions unless they clearly misled the jury and resulted in prejudice to the appellant.” Schultz, 201 Ill.2d at 274, 266 Ill.Dec. 892, 775 N.E.2d 964. “The function of jury instructions is to convey to the jury the correct principles of law applicable to the submitted evidence and, as a result, jury instructions must state the law fairly and distinctly and must not mislead the jury or prejudice a party.” (Emphasis in original.) Dillon, 199 Ill.2d at 507, 264 Ill.Dec. 653, 771 N.E.2d 357.

 

¶ 120 During the jury instruction conference, plaintiff Chakonas requested IPI Civil (2006) No. 10.08, Careful Habits as Proof of Ordinary Care, instruction be given. This instruction informed the jurors that if evidence had been presented that the decedent was a person of careful habits, then it could infer that she exercised ordinary care at the time of the accident.

 

¶ 121 Defense counsel objected to this instruction because there were “ample eyewitnesses” who testified and plaintiffs admitted some degree of fault for the accident on Chakonas’ part. Chakonas’ attorney responded there were witnesses to “bits and pieces” but there was no one witness who observed the entire period in which the decedent was in the exercise of ordinary care. Defendants’ attorney argued that the entire occurrence was witnessed “not only by Mr. Reeves, but Miss Solma, and Mr. Reid also saw what occurred, as did Mr. Youngreen in terms of the events leading up to and immediately after this event.” Chakonas’ attorney maintained that none of these witnesses observed the entire incident from the time when Chakonas was stopped at the stop sign until the accident occurred. The trial court ruled that the instruction would be given over the defense objection.

 

¶ 122 The IPI Civil (2006) No. 10.08, Careful Habits as Proof of Ordinary Care, instruction provides:

 

“If you decide there is evidence tending to show that the decedent was a person of careful habits, you may infer that [she] was in the exercise of ordinary care for [her] own safety at and before the time of the occurrence, unless the inference is overcome by other evidence. In deciding the issue of the exercise of ordinary care by the decedent, you may consider this inference and any other evidence upon the subject of the decedent’s care.”

 

¶ 123 The notes on use for this instruction indicate that “[t]his instruction can be given in a negligence or willful and wanton action based on the Wrongful Death Act when there are no witnesses to the occurrence, other than the defendant, covering the entire period in which the decedent must be in the exercise of ordinary care.” IPI Civil (2006) No. 10.08, Notes on Use.

 

*29 ¶ 124 Plaintiffs respond that Illinois courts have adopted Federal Rule of Evidence 406, which allows for the admission of habit evidence regardless of eyewitness testimony. Plaintiffs are correct. The Illinois Supreme Court adopted Federal Rule 406 in September 2010 as part of the Illinois Rules of Evidence. Illinois Rule of Evidence 406 provides:

 

“Evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.” Ill. R. Evid. 406 (eff.Jan. 1, 2011).

 

[48] ¶ 125 However, allowing the admission of habit evidence does not automatically mean that the jury instruction should have been given. “A reviewing court ordinarily will not reverse a trial court for giving faulty instructions unless they clearly misled the jury and resulted in prejudice to the appellant.” Schultz, 201 Ill.2d at 274, 266 Ill.Dec. 892, 775 N.E.2d 964. “Generally, if a verdict is tainted by an erroneous instruction then the entire verdict is called into question, unless the instruction pertains to the issue of damages.” Graham v. Northwestern Memorial Hospital, 2012 IL App (1st) 102609, ¶ 42, 358 Ill.Dec. 540, 965 N.E.2d 611.

 

[49][50][51] ¶ 126 “It is beyond contention that contributory negligence affects the apportionment of liability, not the calculation of damages.” Graham, 2012 IL App (1st) 102609, ¶ 42, 358 Ill.Dec. 540, 965 N.E.2d 611 (citing Alvis v. Ribar, 85 Ill.2d 1, 25, 52 Ill.Dec. 23, 421 N.E.2d 886 (1981)). “Section 2–1116 of the Code of Civil Procedure [citation] bars a plaintiff ‘whose contributory negligence is more than 50% of the proximate cause of the injury or damage for which recovery is sought’ from recovering any damages. [Citation.]” Coole, 384 Ill.App.3d at 396, 323 Ill.Dec. 289, 893 N.E.2d 303 (citing 735 ILCS 5/2–1116 (West 1994)). “A plaintiff is contributorily negligent when he or she acts without the degree of care that a reasonably prudent person would have used for his or her own safety under like circumstances and that action is the proximate cause of his or her injuries.” Coole, 384 Ill.App.3d at 396, 323 Ill.Dec. 289, 893 N.E.2d 303. The issue of contributory negligence is a question of fact for the jury.   Coole, 384 Ill.App.3d at 396, 323 Ill.Dec. 289, 893 N.E.2d 303.

 

¶ 127 Plaintiffs admitted that Chakonas was contributorily negligent and was part of the proximate cause of the accident. The careful habits instruction contradicts this admission by allowing the jury to infer that Chakonas exercised ordinary care prior to the collision. This is wholly inconsistent with the position taken at trial by all plaintiffs that Chakonas was in fact not in the exercise of due care but rather was contributorily negligent. The issue was how much did her negligence contribute to the cause of the accident. The attorney for Powell and Kakidas argued during closing arguments for the jury to find Chakonas 25% to 35% at fault for the accident. Chakonas’ attorney likewise asserted that Chakonas was 25% contributorily negligent for the accident. Further, this instruction was inconsistent with her attorney’s comment in closing arguments that Chakonas “should not have attempted to cross that street until that truck has passed.” Both attorneys admitted that Chakonas made a mistake in her decision to enter the intersection. It was inconsistent to then instruct the jury that it could find she was in the exercise of due care while at the same time the plaintiffs were admitting her contributory negligence. The issue before the jury was not whether she stopped at the stop sign, as perhaps she normally did, but whether it was safe for her to cross Route 30 at that time.

 

*30 ¶ 128 We find that the instruction misled the jurors by instructing that they could infer that Chakonas exercised due care, despite the admission that she was contributorily negligent. This instruction was erroneous and may well have erroneously affected the allocation of fault by the jury. Therefore, the trial court abused its discretion in giving the careful habits jury instruction.

 

[52] ¶ 129 We next review Dean Foods’ contention that the trial court abused its discretion in refusing to give its proposed jury instruction regarding the burden of proof for agency. During the jury instruction conference, defendant Dean Foods submitted an instruction to explain the burden of proof on Dean Foods’ agency.

 

¶ 130 The proposed instruction, a modified version of IPI Civil (2006) No. B21.02, stated:

 

“If you find that the plaintiffs have proved the propositions required of them as to Jaime Reeves, Alder Group, Inc., and Alco of Wisconsin, Inc., you must then determine whether Jaime Reeves was an agent of Dean Foods Co., Inc.

 

If you find from your consideration of all the evidence that the plaintiffs have not proved that Jaime Reeves was an agent of Dean Foods Co., Inc., then your verdict should be for Dean Foods Co., Inc.

 

If you find that the plaintiffs have proved each of the propositions they are required to prove against Jaime Reeves, Alder Group, Inc. and Alco of Wisconsin, Inc., and have further proved that Jaime Reeves was the agent of Dean Foods Co., Inc., then your verdict should be for the plaintiffs and against Dean Foods Co., Inc .”

 

¶ 131 Plaintiffs objected to this instruction, arguing that it was duplicative of other instructions on the burden of proof and that the instruction was incomplete because it only considered whether Reeves was an agent, but did not address whether he was in a joint venture with Dean Foods or an independent contractor. The trial court agreed with plaintiffs and found that other instructions sufficiently explained the burden of proof and agency. The proposed instruction was denied over Dean Foods’ objection.

 

¶ 132 The trial court instructed the jury on the definition of the burden of proof with IPI Civil (2006) No. 21.01, as follows:

 

“When I say that a party has the burden of proof on any proposition, or use the expression ‘if you find,’ or ‘if you decide,’ I mean you must be persuaded, considering all the evidence in the case, that the proposition on which he has the burden of proof is more probably true than not true.”

 

¶ 133 The trial court also gave the IPI Civil 20.01 instruction on plaintiffs’ burden of proof regarding the negligence claims. The court further instructed the jury with IPI Civil (2006) Nos. 50.03 and 50. 10, which defined agency and independent contractor and set forth what was needed to prove the existence of a principal and agent relationship. These instructions included the following language:

 

“If you find that the Defendant Jaime Reeves was the agent of the Defendant Dean Foods Company at the time of the occurrence and if you find Jaime Reeves is liable, then all Defendants are liable. If you find that Jaime Reeves is not liable, then no Defendant is liable.”

 

*31 ¶ 134 As previously observed, “[t]he trial court has discretion to determine which instructions to give the jury and that determination will not be disturbed absent an abuse of that discretion.” Schultz, 201 Ill.2d at 273, 266 Ill.Dec. 892, 775 N.E.2d 964.

 

[53][54][55] ¶ 135 Here, the burden of proof remained on plaintiffs to prove not only that defendants were negligent, but also to prove that Reeves was acting as an agent of Dean Foods. “ ‘The burden of proving the existence of an agency relationship and the scope of authority is on the party seeking to charge the alleged principal.’ “ Daniels, 382 Ill.App.3d at 75, 320 Ill.Dec. 124, 886 N.E.2d 1193 (quoting Anderson v. Boy Scouts of America, Inc., 226 Ill.App.3d 440, 444, 168 Ill.Dec. 492, 589 N.E.2d 892 (1992)). The instructions, as given to the jury, did not state that it was plaintiffs’ burden to prove that Reeves was an agent of Dean Foods. “ ‘[I]t is essential that jurors receive a definition or description of the applicable burden of proof.’ “ In re Timothy H ., 301 Ill.App.3d 1008, 1016, 235 Ill.Dec. 370, 704 N.E.2d 943 (1998) (quoting Rikard v. Dover Elevator Co., 126 Ill.App.3d 438, 441, 81 Ill.Dec. 686, 467 N.E.2d 386 (1984)). Further, “[a] trial court’s nondescription of the applicable burden of proof cannot be harmless because the jury’s deliberations, findings, and ultimate decision were rendered through an improper scope of analysis.” Timothy H., 301 Ill.App.3d at 1016, 235 Ill.Dec. 370, 704 N.E.2d 943. We conclude that it was reversible error not to give an instruction on the burden of proof on the issue of Dean Foods’ agency.

 

¶ 136 The error of refusing the required burden of proof was compounded by the lack of any direct evidence that Reeves was an agent of Dean Foods. The evidence presented came not from the principal but from inferences drawn from circumstances surrounding other facts. The evidence of agency was based on the testimony of Reeves, Ayen and White, along with statements in the drivers’ manual referring to Dean Foods, and the use of the Dean Foods logo on the tractor and trailer and stationary. No evidence was presented that Dean Foods had any control over Reeves’ schedule or his conduct. Ayen testified that he was responsible for setting Reeves’ schedule. Both Ayen and White were responsible for overseeing Reeves’ logbooks and compliance with federal regulations. None of the witnesses at trial was an employee or representative of Dean Foods.

 

[56] ¶ 137 Although there was some evidence from which to infer an agency relationship, there was never any direct proof that Dean Foods controlled the agent, and more important, no evidence on this record that Dean Foods was aware of any of the improperly admitted evidence of bad acts that pervaded these proceedings. IPI Civil (2006) No. 21.01 simply defined the burden, more probably true than not, but it did not allocate the burden. IPI Civil (2006) No. 20.01 related to the burden of proof on negligence only. Similarly, IPI Civil (2006) No. 50.03 instructed the jury that if it found Reeves was Dean Foods’ agent at the time of the accident and found Reeves’ liable, then it should find Dean Foods liable. Dean Foods’ proposed instruction explained that the burden was on plaintiffs to establish an agency relationship. The failure to give an applicable burden of proof instruction is not harmless. See Timothy H., 301 Ill.App.3d at 1016, 235 Ill.Dec. 370, 704 N.E.2d 943. Therefore, the trial court’s refusal to give Dean Foods’ instruction to the jury deprived Dean Foods of a fair trial.

 

*32 ¶ 138 Defendants also argue that the jury’s finding that Christina Chakonas was 40% contributorily negligent was against the manifest weight of the evidence. Because we have already remanded the case for a new trial, we need not reach the merits of this issue.

 

¶ 139 Finally, defendants contend that the jury’s award of damages was excessive and the trial court erred when it denied their motion for remittitur. Defendants also request a new trial because the record showed that the verdicts were, in part, a result of the passion and prejudice against defendants based on the improper admission of the prior bad acts evidence.

 

¶ 140 Since we have already concluded that trial court erred in admitting evidence of defendants’ prior bad acts and committed instructional errors and we have remanded the case for a new trial, including the issue of damages, we do not need to reach the merits of this issue.

 

¶ 141 Based upon all of the above, we reverse the verdicts in favor of plaintiffs and remand for a new trial consistent with this opinion.

 

¶ 142 Reversed and remanded.

 

Justice PALMER concurred in the judgment and opinion.

Justice GORDON dissented, with opinion.

 

¶ 143 Justice GORDON, dissenting:

¶ 144 I must respectfully dissent on three issues: (1) the admission of “prior bad acts evidence” admitted against Reeves, Alco of Wisconsin, Inc., and Alder Group, Inc. that the majority finds was improper; (2) the tendering of a “careful habits” instruction to the jury after plaintiffs admitted that the driver, Christina Chakonas, was contributorily negligent in causing the fatal collision, which the majority finds was error; and (3) the burden of proof instructions regarding agency.

 

¶ 145 A defendant is not entitled to a perfect trial, only a fair trial.   Wilbourn v. Cavalenes, 398 Ill.App.3d 837, 855, 338 Ill.Dec. 77, 923 N.E.2d 937 (2010). As the majority notes, substantial verdicts for three young dead people against defendants were reversed when the majority found that the trial court erred in denying defendant Alder a substitution of judge as a matter of right affected the jury verdicts against all defendants. Our supreme court reversed and reinstated those verdicts against all of the defendants except Alder. Plaintiffs dismissed Alder as a party defendant with prejudice, and now we must decide defendants’ posttrial motions. Powell v. Dean Foods Co., 2012 IL 111714, ¶ 50, 358 Ill.Dec. 333, 965 N.E.2d 404.

 

¶ 146 I. “Prior Bad Acts” Evidence

¶ 147 Defendants argue that the evidence of prior speeding, violations of federal trucking regulations and the $10,000 fine had no purpose other than to foster the legally impermissible inference that defendants acted badly at the time of the collision because they had acted badly prior to the collision. They argue that the fact that Reeves may have been speeding and had falsified his logs prior to the collision, made it no more likely that he was speeding at the time of this accident or falsified his log here, and as a result, the trial court abused its discretion in admitting this evidence.

 

*33 ¶ 148 Specifically, defendants argue that there was no proper purpose for informing the jury (1) that Reeves was speeding prior to the accident; (2) that Reeves and Alder violated federal trucking regulations several weeks and months prior to the accident; (3) that Reeves had been found to have falsified driving logs prior to the accident; (4) and that Reeves and Alder had been fined after an audit by the federal government for misconduct in maintaining its trucking logs. As a result, defendants argue that all of this evidence was erroneous, highly prejudicial, and warrants the granting of a new trial.

 

¶ 149 Evidence of a person’s conduct on another occasion generally is not relevant or admissible. Doe v. Lutz, 281 Ill.App.3d 630, 638, 218 Ill.Dec. 80, 668 N.E.2d 564 (1996); Plooy v. Paryani, 275 Ill.App.3d 1074, 1089, 212 Ill.Dec. 317, 657 N.E.2d 12 (1995). A court will not consider evidence that a person has, or has not, done a certain act at a particular time as probative of a contention that he has, or has not, done a similar act at another time.   Bevelheimer v. Gierach, 33 Ill.App.3d 988, 995, 339 N.E.2d 299 (1975).

 

¶ 150 However, such evidence may be admissible if offered for some purpose other than as proof of a person’s disposition to behave in a certain way.   Wernowsky v. Economy Fire & Casualty Co., Inc., 106 Ill.2d 49, 53, 87 Ill.Dec. 484, 477 N.E.2d 231 (1985). Thus, the admission of evidence of prior similar wrongful conduct to establish purpose, intent, motive, knowledge, modus operandi, or other mental state of a party to a civil action, forms an exception to the general rule which prohibits proof of one wrongful act by evidence of the commission of another such act. Thompson v. Petit, 249 Ill.App.3d 1029, 1034 (1998).

 

¶ 151 Plaintiffs claim that Reeves was fatigued because he had driven beyond the hourly limits provided for by the Federal Motor Carrier Safety Regulations. At trial, plaintiffs introduced evidence that Alco had assigned Reeves a driving schedule that ensured that Reeves would be required to violate federal regulations if he followed that schedule by requiring Reeves to both speed and to drive beyond the maximum hours allowed for truck drivers in an eight-day work period. Plaintiffs also introduced evidence that Reeves’ driver logs for the week in question were incorrect and that he was driving in excess of the 70–hour rule at the time of the collision.

 

¶ 152 This evidence showed that Reeves had the intention to falsify his logs and that all of the other defendants had knowledge of what he was doing. The majority states on page 46 of its opinion that the intent, mental state, or knowledge of any of the defendants was not at issue in this negligence action. I say it was the major issue of the case.

 

¶ 153 In the case at bar, Reeves testified that he did not know what happened to the trip ticket for the week ending July 6, 2002 when the accident occurred on July 6, 2002. A trip ticket is maintained to keep track of miles driven, stops made, and fuel. However, the log maintained by Reeves was produced and is a separate document from a trip ticket.

 

*34 ¶ 154 The prior bad act evidence revealed that, in June 2002, the federal motor carrier compliance inspector performed an audit. Reeves testified that “it was determined he had made some mistakes on [his log].” He denied it was intentional; however, plaintiff argues that the evidence of the audit showed Reeves falsified his logs. Defendants assert that the admission of this evidence was erroneous, highly prejudicial, and warrants the granting of a new trial.

 

¶ 155 Defendants argue that the evidence of prior speeding, violations of trucking regulations and the $10,000 fine had no purpose other than to foster the legally impermissible inference that defendants acted badly at the time of the collision because they had acted badly prior to the collision.

 

¶ 156 Plaintiffs maintain that the evidence was properly admitted. The earlier log violations demonstrated Alco’s knowledge in scheduling Reeves for long runs and “implicitly” approved of Reeves’ driving time violations. Plaintiffs assert that the evidence was properly admitted to show absence of mistake and intent showing that the violations were not accidental.

 

¶ 157 Plaintiffs further claim that the log book violations were relevant to Reeves’ credibility because it demonstrated his dishonesty and desire to conceal facts which are required to be reported. Plaintiffs additionally claim that the log book violation placed defendants on notice that Reeves was routinely driving over the speed limit and over his maximum allowed hours-ofservice, which made it incumbent for defendants not to schedule Reeves for truck runs near 500 miles. Plaintiffs further claim that Reeves’ driving habits also placed defendants on notice that Reeves was driving while fatigued.

 

¶ 158 Illinois Rule of Evidence (IRE) 404(b) (eff.Jan.1, 2011), was modeled after Federal Rule of Evidence 404(b), and provides in its relevant part that “[e]vidence of other crimes, wrongs or acts * * * may * * * be admissible for * * * purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.” Ill. R. Evid. 404(b). “Evidence of crimes, wrongs, or acts other than the one at issue may be admissible if offered for some purpose other than as proof merely of a person’s disposition to behave in a certain way.” Wernowsky, 106 Ill.2d at 53, 87 Ill.Dec. 484, 477 N.E.2d 231.

 

¶ 159 In Terpstra v. Niagara Fire Ins. Co., 26 N.Y.2d 70, 76, 308 N.Y.S.2d 378, 256 N.E.2d 536 (1970), the trial court allowed the defendant insurer to introduce plaintiff’s admission to the police that earlier fire loss recoveries had given him the idea to commit arson. The previous fire recoveries were admitted to show intent or a plan. Terpstra, 26 N.Y.2d at 76, 308 N.Y.S.2d 378, 256 N.E.2d 536. Here, the trucking log falsifications were admitted to show absence of mistake and a plan and an intent to drive over the speed limit for long distances in order to meet schedules, thus, placing all defendants on notice of this conduct. It showed defendant’s modus operandi.

 

*35 ¶ 160 In Thompson v. Petit, 294 Ill.App.3d 1029, 229 Ill.Dec. 387, 691 N.E.2d 860 (1998), the trial court was affirmed when it admitted evidence in a negligence action that the defendant had similarly cut off an individual six years earlier and then smashed his vehicle into the other vehicle. In Thompson, the plaintiff was shot by the defendant after a traffic-related argument. Thompson, 294 Ill.App.3d at 1031, 229 Ill.Dec. 387, 691 N.E.2d 860. The appellate court reasoned that when evidence of prior bad acts are relevant to “the issue of a defendant’s state of mind or intent, the prior conduct must be similar to the conduct in issue” in order to be admissible in evidence. Thompson, 294 Ill.App.3d at 1038, 229 Ill.Dec. 387, 691 N.E.2d 860. In the case at bar, the prior bad acts of Reeves are identical to the misconduct at issue. Plaintiff’s expert Hess opined that, if Reeves had not been speeding, then he would not have reached the location of the accident at the time he did. He found inconsistencies in Reeves’ log as compared to the truck’s Detroit Diesel Electronic Controls (DDEC) information known as the “black box,” which was frequently at odds with Reeves’ daily log for his driving hours. He also found data retrieved from the semi-truck’s engine control module (ECM) that showed Reeves had reached a speed of 79.5 miles per hour with an average speed of 65.9 miles per hour. Hess concluded that the violations of the federal regulations were the causes of death of plaintiff’s decedents. Not only do Reeves’ bad acts show an intent to deceive, they show a continued plan to falsify relevant information of speed, distance, and time traveled.

 

¶ 161 Similarly, in Oxford Bank & Trust v. Hartford Accident & Indemnity Co., 298 Ill.App.3d 199, 201, 206–07, 232 Ill.Dec. 366, 698 N.E.2d 204 (1998), the plaintiff bank filed a claim seeking employee dishonesty coverage for its losses from a check-kiting scheme which one of its employees had participated in with a customer. The trial court allowed evidence that, at a bank where the employee had worked previously, dealings between the employee and the same customer had resulted in a loss of money to that bank also. Oxford Bank & Trust, 298 Ill.App.3d at 203, 232 Ill.Dec. 366, 698 N.E.2d 204. In affirming the trial court, the appellate court specifically rejected the argument that the evidence “only demonstrate[d] that the defendant ha[d] committed bad acts in the past” and held that the evidence was admissible to demonstrate modus operandi. Oxford Bank & Trust, 298 Ill.App.3d at 208, 232 Ill.Dec. 366, 698 N.E.2d 204.

 

¶ 162 Additionally, in Reinneck v. Taco Bell Corp., 297 Ill.App.3d 211, 213, 231 Ill.Dec. 543, 696 N.E.2d 839 (1998), the trial court found in favor of a terminated employee who had sued her former employer, claiming that she was discharged in retaliation for claiming her rights to workers’ compensation. The court upheld the trial court’s admission of testimony from other former employees of the defendant who were fired after filing workers’ compensation claims because it was “directly relevant” to the defendant’s motive in terminating the plaintiff. Reinneck, 297 Ill.App.3d at 215, 231 Ill.Dec. 543, 696 N.E.2d 839.

 

*36 ¶ 163 Like the evidence in Oxford Bank and Reinneck, the evidence in the case at bar of defendants’ prior bad acts was directly relevant to the manner in which defendants operated their business; it showed evidence of motive, intent, plan, and modus operandi. So the trial court did not err in admitting it. This conclusion is supported by independent evidence from plaintiff’s expert that Reeves was speeding and driving in excess of the 70–hour rule on the day of the collision at issue.

 

¶ 164 The evidence here showed that Reeves testified that he did not know what happened to the trip tickets that kept track of his stops, miles driven in each state, and the fuel placed into the truck. The only evidence Reeves was able to produce was his logbooks for his time on the road. Without the weekly trip tickets, there was no check and balance system intact and false entries in a logbook went unverified and were easily subject to manipulation. Plaintiff’s expert Hess compared the truck’s DDEC data to Reeves’ daily log and found that they were at odds. Hess detailed the entire week prior to the accident and compared the DDEC report to Reeves’ logs to determine his driving and duty hours. Hess relied exclusively on the DDEC report to form his opinion that Reeves had exceeded the 70–hour rule, found him speeding, fatigued, and responsible for the death of plaintiff’s decedents. Hess opined that Reeves violated the federal regulations at the time of the accident. In addition, the data retrieved from the semi-truck’s engine control module (ECM) supported Hess’ opinion. The ECM showed that the driver of the semi-truck’s average speed was 65.9 miles per hour and Reeves had reached a speed of 79.5 miles per hour. When one takes into consideration that Reeves failed to produce his trip tickets and that his log entries do not correlate with the DDEC report data or the ECM, the prior actions of Reeves in falsifying his log becomes relevant as to his modus operandi and intent in making his trips. It is a reasonable inference that he falsified the log book so that he could comply with the federal regulations, working in excess of the 70–hour rule and drove over the speed limit to maintain his schedule. His employer’s knowledge of that modus operandi is equally relevant to a determination of whether the other defendants were negligent. Therefore, the prior falsified evidence was proper to show modus operandi, as well as intent and knowledge of the other defendants.

 

¶ 165 Plaintiffs cite a federal district court decision from the Southern District of Illinois, Trotter v. B & W Cartage Co., 2006 U.S. Dist. LEXIS 19074 (S.D.Ill.2006), to support their position that the evidence of prior log violations of truckers is proper evidence in a jury trial for negligence. The Trotter court admitted evidence of prior “faked” logs because it tended to prove that the trucking company operated with a conscious indifference to its federally mandated duty and also because its behavior sent a message to the drivers that violating hours of service regulations was acceptable. Trotter, 2006 U.S. Dist. LEXIS 19074, *20–*21. In the case at bar, the majority dismisses Trotter as not applicable because the trial court was reviewing defendant’s motion for a summary judgment on a request for punitive damages filed by the plaintiffs against the defendant trucking company. Trotter, 2006 U.S. Dist. LEXIS 19074, *1. The majority concludes that, since plaintiffs were seeking punitive damages, they would have to prove the trucking company’s knowing or conscious disregard of the federal regulations in order to recover the punitive damages, and that is why the trial court allowed the prior evidence of falsifying the trucking logs.

 

*37 ¶ 166 The Trotter case is close on “all fours” to the case at bar, and the fact that the plaintiff had to prove more than negligence does not give a court authority to bar prior bad acts for that reason. The quantum of proof has never been the consideration of any cases on this subject matter. If evidence is inadmissible, it cannot be considered at all on a motion for summary judgment. Watkins v. Schmitt, 172 Ill.2d 193, 203–04, 216 Ill.Dec. 822, 665 N.E.2d 1379 (1996). Likewise, if evidence is relevant to gross negligence, it certainly should be relevant to negligence. I cannot find any cited cases to substantiate this statement, nor can I find any cases that would support the proposition that prior falsification of log entries can only be admissible into evidence when punitive damages or gross negligence is in issue.

 

¶ 167 As the majority pointed out,

 

“The district court noted that the deposition testimony revealed the trucking company’s method for reviewing the logs was inadequate for the last five to seven years, the managers would regularly schedule drivers with minimal time for breaks, and that ‘[m] oney took precedent [sic ] over safety.’ Trotter, 2006 U.S. Dist. LEXIS 19074, *5–7. The court also found that the evidence showed a pattern of ‘conscious indifference’ to the federal regulations. Trotter, 2006 U.S. Dist. LEXIS 19074, *7. As a result, the district court denied the defendants’ motion for summary judgment because reasonable jurors could find that the imposition of damages based on aggravating circumstances was warranted.”

 

¶ 168 I agree with the majority that the admission of the prior bad acts of speeding and log falsification required a careful weighing of the probative value of this evidence against any prejudicial impact it would have upon the jury. The rule in admitting prior bad act evidence is set forth in “Trial Evidence” by Mauet and Wolfson (4th ed.2009), which states:

 

“The rule is one of inclusion. It authorizes the admission of a party’s conduct that is extrinsic to the matter on trial for any relevant reason other than to prove the party’s propensity to do the one thing at issue. It would be indulging in fiction to say that admissible other conduct evidence must be completely free of any propensity taint. A reasonable fact finder might entertain that notion no matter how careful the trial judge is in defining the purpose of the evidence. The mere existence of the possibility of misuse is not enough to bar the evidence if it fits within [Federal Rule of Evidence] 404(b). It is enough to call on the judge to carefully exercise his discretion.”

 

The majority concludes that weighing the evidence as to its probative value against its prejudicial impact was not done in this case, and I find that it was and that it was done properly.

 

¶ 169 In the case at bar, plaintiffs allege that Reeves was fatigued because he had driven beyond the hourly limits provided for by the Federal Motor Carrier Safety Regulations. At trial, plaintiffs introduced evidence that Alco of Wisconsin, Inc. had assigned Reeves a driving schedule that ensured that Reeves would be required to violate federal regulations if he followed that schedule by requiring Reeves to both speed and to drive beyond the maximum hours allowed for truck drivers in a eight day work period. The evidence that plaintiff introduced at trial showed that Reeves could not have made his scheduled runs unless he sped and drove in excess of the 70 hour rule. Plaintiffs introduced evidence that Reeves’ driver logs for the week in question were incorrect and that he was driving in excess of the 70 hour rule at the time of the collision. Thus, the evidence of Reeves speeding and driving over the 70 hour limit on the week in question was relevant and admissible at trial to show that Reeves was fatigued at the time of the collision, and that the other defendants were aware that his logs were inaccurate and that he was driving over the 70–hour limit per week. The evidence showed that Reeves had the intent to falsify his logs and that the other defendants had knowledge of his conduct.

 

*38 ¶ 170 Reeves failed to produce his trip tickets as a check and balance to his log entries. That fact is important with all the other facts in this case in order to determine whether the trial court abused its discretion in allowing the admission of the “bad acts” evidence. The trial court allowed the evidence of past log falsification and speeding to show intent to speed and make log falsifications so that Reeves could make scheduled runs in the time period that his employer required. It was part of defendant’s modus operandi and provided all of defendants notice of what Reeves was doing.

 

¶ 171 The majority is giving the impression that bad act evidence is allowed only in civil cases where punitive damages are at issue. I disagree and none of the out of state cases that I cite say that. What generally occurs is that plaintiffs in trucking negligence cases normally file a count for punitive damages when they have evidence of prior log falsification. Here, plaintiff did not do so.

 

¶ 172 In Smith v. Printup, 254 Kan. 315 1993, 866 P.2d 985), the Supreme Court of Kansas said the following:

 

“Plaintiff’s theory is that Printup had a long history of falsifying his driving logs and inspection reports and that the companies for which he worked had a long history of tolerating such violations. If the jury could find that fatigue due to hours of service violations caused or contributed to the accident, then evidence that the companies knew or had reason to know of Printup’s false logs and hours of service violations is relevant to authorization and ratification of conduct that caused or contributed to the accident.

 

* * *

Southwest’s historical treatment of Printup’s alleged noncompliance with log and hours of service requirements is relevant. Southwest was his employer and had authority to fire him. To the extent Printup’s noncompliance was related to fatigue, Red Ball’s and Southwest’s tolerance of such noncompliance was both relevant and admissible.” Smith, 254 Kan. at 345, 866 P.2d 985.

The Supreme Court of Kansas never indicated that a punitive count is necessary for the admission of prior falsification of logs.

 

¶ 173 As a matter of course, the conduct of a truck driver in maintaining logs are admitted in evidence in negligence cases throughout the United States where there are allegations of fatigue to show amongst other things that the employer had notice and knowledge of the truck driver’s past conduct. In Torres v. North American Van Lines, Inc., 135 Ariz. 35, 658 P.2d 835 (1992), a wrongful death jury trial, the driver’s prior logs for three months were admitted into evidence to show that the driver failed to include a listed item in his log to avoid a determination that he violated the 70–hour rule. The Arizona court never indicated that a punitive count is necessary for the admission of a pattern of incomplete log entries.

 

¶ 174 In Purnick v. C.R. England, Inc., 269 F.3d 851, 852 (7th Cir.2001), the trial court admitted evidence that a truck driver falsified logs, drove beyond the 10–hour limit several times in the week before the crash, and was fatigued when he struck the plaintiff solely in a punitive damage case. Our Seventh Circuit never indicated that prior falsified logs are admissible only in punitive damages cases. In Librado v. M.S. Carriers, Inc., 2004 U.S. Dist. LEXIS 12203 (N.D.Tex.2004), a Texas district court considered the Qualcomm data, driver logs where in a year, the truck driver committed more than 320 driver log violations and violated the federal hours-of-service regulations. The Texas district court never indicated that prior falsified logs are admissible only in punitive damages cases. In Briner v. Hyslip, 337 N.W.2d 858, 867 (Ia.1983), the evidence admitted in the trial court in a wrongful death jury trial verdict included the fact that the truck driver had not kept a log for the three weeks prior to his collision and that he had previously failed to maintain logs to show that the employer had notice and knowledge of the log violations and did nothing about it. The Iowa court never indicated that prior falsified logs are admissible only in punitive damages cases. See also Elbar, Inc. v. Claussen, 774 S.W.2d 45 (Tex.Ct.App.1989) (where the truck driver’s log admitted in evidence showed that he drove for period of time which violated federal regulations). In Elbar, the court stated:

 

*39 “Elbar argues that because it was in compliance with D.O.T. regulations, a finding of gross negligence against it was precluded as a matter of law. We disagree. While Elbar maintained at trial that its drivers operated within D.O.T. requirements, there was also evidence that neither Bullock’s nor Ingersoll’s driving logs were in compliance with federal regulations and that such inaccuracies made auditing difficult. Additionally, during trial, Elbar’s General Manager admitted that Ingersoll was grossly out of compliance with federal regulations and should not have accompanied Bullock on the trip in question. Elbar’s claim to be in compliance with federal regulations may constitute evidence that it exercised ‘some care’ in its operations; however, the jury was entitled to determine what weight to accord that evidence.”   Elbar, 774 S.W.2d at 51.

 

The Elbar court never indicated that prior falsified logs are admissible only in punitive damages cases. See also Came v. Decker Transport Co., Inc., 2005 U.S. Dist. LEXIS 40037 (M.D.Penn.2005) (where a federal district judge considered in a motion for summary judgment an expert’s report that included that a truck driver had been on duty for at least 75.5 hours in the eight days prior to the collision, and that the driver had previously falsified his truck logs in violation of federal regulations). The Pennsylvania court never indicated that prior falsified logs are admissible only in punitive damages cases.

 

¶ 175 Although the majority attempts to distinguish cases where the issue is one of punitive damages or gross negligence, the only difference between allowing prior bad acts in a punitive damages case as compared to a compensatory damages case is relevancy. The cases I cite on this subject matter all stand for the proposition that the prior bad acts must be relevant to the issue at hand to be admissible. In the case at bar, the majority does not argue relevancy, nor do the defendants. The issue in the case at bar simply put is whether the prior bad act evidence is being used to prove the character of Reeves to foster the legally impermissible inference that since he acted badly prior to the collision, he must have acted badly at the time of the collision. As I have shown in this dissent, case authority overwhelmingly supports the use of a trucker’s past conduct in falsifying log records when independent evidence shows that the log records were incorrect at the time of a collision. That evidence is probative in establishing fatigue and outweighs its prejudicial effect. In the case at bar, Reeves failed to produce his route tickets, claiming they were lost. His logs were impeached by the data from the DDEC and ECM.

 

¶ 176 The prior bad act evidence here also placed all of the defendants on notice that Reeves was speeding in order to maintain his schedule and gave them notice that he was not maintaining his logs in conformance with federal regulations. But most importantly the bad act evidence was also evidence of the agency relationship between Reeves and the other defendants which was at issue before the trial court and is an issue on this appeal. The evidence of Reeves’ previous conduct of falsifying his logs, and speeding in order to meet his employers’ schedule, and the fine against the employer showed that all of defendants were aware of this conduct and were responsible. Such evidence was offered for purposes other than Reeves’ disposition to behave in a certain way. Wernowsky v. Economy Fire & Casualty Co., 106 Ill.2d 49, 53, 87 Ill.Dec. 484, 477 N.E.2d 231 (1985). Its probative value exceeds its prejudicial effect because the same evidence of Reeves’ log entries for this accident were not consistent with the information obtained from his truck data from the DDRC and ECM, and plaintiff’s expert opined he was speeding. Thus, the bad act evidence could not have been unfairly prejudicial. People v. Illgen, 145 Ill.2d 353, 375–76, 164 Ill.Dec. 599, 583 N.E.2d 515 (1991). This court in a civil non-negligence case authored by Justice Pat Quinn allowed bad act evidence “to show knowledge.” Valentino v. Hilquist, 337 Ill.App.3d 461, 471, 271 Ill.Dec. 697, 785 N.E.2d 891 (2003). The trial court was within its sound discretion to admit the prior bad acts into evidence and the jury’s verdict should not be disturbed.

 

¶ 177 II. The “Careful Habits” Jury Instruction

*40 ¶ 178 “[T]he trial court has discretion to determine which instructions to give the jury and that determination will not be disturbed absent an abuse of that discretion.” Schultz v. N.E. Illinois Regional Commuter R.R. Corp., 201 Ill.2d 260, 273, 266 Ill.Dec. 892, 775 N.E.2d 964 (2002). The majority finds that the careful habits jury instruction here misled the jury by instructing them that they could infer that Chakonas, the driver, exercised due care, despite the admission that she was contributorily negligent. The majority concludes that the instruction may well have erroneously affected the allocation of fault by the jury. Well anything could be possible and the term “may well have” means possible. In fact, the Living Webster Encyclopedic Dictionary of the English language defines “may” as “used to express possibility.” The majority basically adopts the arguments of defendants, who argue that the “careful habits” instruction given to the jury was error because: (1) the instruction can only be given in the absence of eyewitness testimony regarding the incident leading to a wrongful death action, and (2) plaintiffs’ counsel admitted that Christina Chakonas was contributorily negligent in closing argument.

 

¶ 179 A reviewing court will reverse a trial court’s determination about which instruction to give, only if the trial court abused its discretion. Schultz v. Northeast Illinois Regional Commuter R.R. Corp., 201 Ill.2d 260, 273, 266 Ill.Dec. 892, 775 N.E.2d 964 (2002). A trial court has discretion in determining which instructions to give. Schultz, 201 Ill.2d at 273, 266 Ill.Dec. 892, 775 N.E.2d 964. When deciding whether a trial court abused its discretion, a reviewing court will examine the jury instructions in their entirety, to determine whether they fairly, fully and comprehensively informed the jury of the relevant law. Schultz, 201 Ill.2d at 273–74, 266 Ill.Dec. 892, 775 N.E.2d 964. Ordinarily, a reviewing court will not reverse a trial court, even if the trial court gave faulty instructions, unless the instructions clearly misled the jury and resulted in prejudice to the appellant. Schultz, 201 Ill.2d at 274, 266 Ill.Dec. 892, 775 N.E.2d 964.

 

¶ 180 As noted, the trial court instructed the jury based upon IPI Civil No. 10.08, as follows:

 

“If you decide there is evidence tending to show that the decedent was a person of careful habits, you may infer that she was in the exercise of ordinary care for her own safety and before the time of the occurrence, unless the inference is overcome by other evidence. In deciding the issue of ordinary care by the decedent you may consider this inference and any other evidence upon the subject of the decedent’s care.”

 

The Notes on Use following IPI Civil No. 10.08 is instructive:

“can be given in a negligence or willful and wanton action based on the Wrongful Death Act when there are no witnesses to the occurrence, other than the defendant, covering the entire period in which the decedent must be in the exercise of ordinary care.” IPI Civil No. 10.08.

 

¶ 181 Citing Plank v. Holman, 46 Ill.2d 465, 264 N.E.2d 12 (1970), defendants argue that the trial court abused its discretion in instructing the jury as to Christina Chakonas’ careful habits because there were eyewitnesses to the collision. I disagree with defendants’ argument for several reasons.

 

*41 ¶ 182 First, I find Plank factually distinguishable. In Plank, a widow operated a motor vehicle about eight or nine automobile lengths behind a motor vehicle operated by her husband with no vehicles in between. The husband’s motor vehicle was struck by another motor vehicle travelling in the opposite direction on a thoroughfare. The issue in that case was which motor vehicle involved in the collision had crossed the center line of the thoroughfare causing the collision. The surviving widow who was driving behind her husband’s motor vehicle testified that she had clearly observed her husband’s motor vehicle during the entire occurrence and observed the entire accident. Our supreme court held that the trial court properly barred evidence regarding the husband’s careful driving habits. Plank, 46 Ill.2d at 469–70, 264 N.E.2d 12. Here, there was no testimony regarding the complete movement of the Chakonas vehicle, only incomplete fragments of that movement. Reeves testified that he did not observe the Chakonas vehicle until after impact. Youngreen testified that he observed the Chakonas vehicle stopped at the stop sign, but how the vehicle moved after that is unknown. There was no actual eyewitness to all of the movements of the motor vehicle. Accordingly, the instruction would not be barred under Plank.

 

¶ 183 In Bitner v. Central Illinois Light Co., 75 Ill.App.3d 715, 31 Ill.Dec. 290, 394 N.E.2d 492 (1979), the decedent climbed a ladder to paint the top of an oil tank, came into contact with power lines which electrocuted him, and caused him to fall to the ground. Bitner, 75 Ill.App.3d at 717, 31 Ill.Dec. 290, 394 N.E.2d 492. The appellate court held that the eyewitness was not competent because he had not observed the actual incident, and found that the trial court erred in not allowing evidence of the decedent’s careful habits. Bitner, 75 Ill.App.3d at 720, 31 Ill.Dec. 290, 394 N.E.2d 492.

 

¶ 184 In the case at bar, there were eyewitnesses for only some parts of the events leading up to the collision, but no one had observed the entire movement of decedent’s vehicle or the impact. Reeves testified that he did not observe decedent’s vehicle until after impact, and another witness testified that he observed decedent’s vehicle stopped at the stop sign, but did not observe the collision. However, like Bitner, no witnesses observed the accident itself. So even under the rule that requires no eyewitness testimony, habit testimony of decedent’s careful habits would be admissible in the case at bar.

 

¶ 185 The salient point is that an eyewitness must actually observe the whole accident in question. This did not occur in the case at bar, so the trial court’s admission of evidence about decedent’s careful habits and the corresponding jury instruction were not erroneous.

 

¶ 186 Second, Illinois courts have adopted Federal Rule of Evidence 406 (Fed.R.Evid.406) regarding the admission of habit and routine practice evidence since Plank. In Alvarado v. Goepp, 278 Ill.App.3d 494, 215 Ill.Dec. 313, 663 N.E.2d 63 (1996), this court in a decision authored by Justice Warren Wolfson noted that adoption. Alvarado, 278 Ill.App.3d at 496, 215 Ill.Dec. 313, 663 N.E.2d 63, citing Hajian v. Holy Family Hospital, 273 Ill.App.3d 932, 942, 210 Ill.Dec. 156, 652 N.E.2d 1132 (1995); Taruc v. State Farm Mutual Auto. Ins. Co., 218 Ill.App.3d 51, 161 Ill.Dec. 7, 578 N.E.2d 134 (1991); Wasleff v. Dever, 194 Ill.App.3d 147, 155, 141 Ill.Dec. 86, 550 N.E.2d 1132 (1990).

 

*42 ¶ 187 Rule 406 provides:

 

“Evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.” (Emphasis added .) Fed.R.Evid. 406.

 

Defendant’s contention that the presence of an eyewitness precludes the admission of habit testimony is contrary to Rule 406 of the Federal Rules of Evidence and case law. Rule 406 permits habit or custom evidence even if eyewitness testimony is available, Hajian, 273 Ill.App.3d at 942, 210 Ill.Dec. 156, 652 N.E.2d 1132, and that rule was in effect at the time of the trial.

 

¶ 188 Finally, I do not agree with the majority’s decision that plaintiffs’ admission in closing argument that Christina Chakonas was contributorily negligent in causing the collision was legally inconsistent with the jury instruction as to Christina Chakonas’ careful habits. At trial, there was dispute as to whether Christina Chakonas stopped at the stop sign prior to entering the intersection and the evidence of her careful habits went to establishing that she did stop at the stop sign. Our review of the transcript from closing arguments shows that plaintiffs’ counsel was referring to Christina’s misjudgment of the semi-truck’s speed prior to entering the intersection, not whether she stopped at the stop sign.

 

¶ 189 Further, even if the trial court erred in giving the careful habits instruction to the jury, the error was harmless. As noted, ordinarily, a reviewing court will not reverse a trial court, even if the trial court gave faulty instructions, unless the instructions as a whole clearly misled the jury and resulted in prejudice to the appellant. Schultz, 201 Ill.2d at 274, 266 Ill.Dec. 892, 775 N.E.2d 964. I find that the jury instructions as a whole did not clearly mislead the jury. The jury was instructed as to contributory negligence, a theory advanced by defendants, and the jury concluded that Christina Chakonas was 40 percent contributorily negligent in causing the collision. Based upon the evidence, the jury’s allocation of fault was within the permissible bounds of reason and the defendants have failed to show how the careful habits instruction resulted in prejudice which rose to the level of reversible error. Accordingly, any effect on the verdict arising from the careful habits instruction was de minimus and does not require a new trial.

 

¶ 190 In order for the jury to have been confused from the careful habits instruction, the defendants would have to show that they were prejudiced. The attorney for Powell and Kakidas argued during closing arguments that Chakonas was 25 to 35% contributorily negligent. Chakonas’ attorney asserted that she was 25% contributorily negligent because she “should not have attempted to cross that street until the truck had passed.” The careful habits argument was limited to whether she had stopped at the stop sign before making her left turn. The defense argued that Chakonas was the sole cause of the accident or was over 50% contributorily negligent. There was no confusion because the jury found her 40% contributorily negligent. It is the position of the majority that the jury “may well have” found a greater degree of fault against Chakonas if the instruction was not given. However, the “proof is in the result.” If the jury had found that Chakonas was less than 25% contributorily negligent, that would have been proof that the jury was confused. But when the majority concludes that the jury “may well have” found more than 40% contributory negligence, they are guessing. There is no evidence that this jury was confused and its verdict should not be disturbed. The majority has not demonstrated how the trial court abused its discretion.

 

¶ 191 III. The Burden of Proof Instructions Regarding Agency

*43 ¶ 192 Dean Foods argues and the majority finds that the trial court’s failure to instruct the jury as to the burden of proof regarding agency denied it a fair trial.

 

¶ 193 The trial court gave the jury the following burden of proof instruction regarding plaintiffs’ agency claims against Dean. Utilizing IPI Civil Nos. 50.03, 50. 10, and 72.04, the trial court instructed the jury as follows:

 

“Defendants, Dean Foods Company, Alco [of Wisconsin], Inc., Alder Group, Inc. are sued as the principal and the Defendant Jaime Reeves as their agent. Dean Foods Company denies that any agency existed.

 

If you find that Defendant Jaime Reeves was the agent of the Defendant Dean Foods Company at the time of the occurrence and if you find Jaime Reeves is liable, then all Defendants are liable.

 

* * *

If you find that Jaime Reeves is not liable, then no Defendant is liable.

 

* * *

The question has been raised whether at the time of the occurrence Jamie Reeves was the agent of the Defendant Dean Foods Company or was an independent contractor. An agent is a person who by agreement with another, called a principal, represents the principal in dealings with third persons or transacts some other business, manages some affair, or does some service for the principal, with or without compensation. The agreement may be oral or written, expressed or implied. The term “agent” is broader than either “servant” or “employee.” A servant or employee is an agent, but one may be an agent although he is neither a servant nor an employee.

 

If you find that one person has a right to control the actions of another at a given time, you may find that the relation of principal and agent exists, even though the right to control may not have been exercised.

 

An independent contractor is one who undertakes a specific job where the person who engages him does not have the right to discharge him or to direct and control the method and manner of doing the work.

 

In determining whether at the time of the occurrence Jaime Reeves was the agent of the defendant Dean Foods Company or was an independent contractor, you may consider the method of payment; the right to discharge; the skills required and the work to be done; who provides the tools, materials and equipment; whether the worker’s occupation is related to that of the employer; and whether the employer deducted for withholding tax.

 

The principal is liable to third persons for the negligence of his agent in the transaction of the business of the principal, if the agent himself is liable. The one who engages an independent contractor is not liable to others for the negligence of the contractor.

 

¶ 194 Dean Foods objected to the above instructions pertaining to plaintiffs’ agency claims claiming that the instructions did not adequately inform the jury that plaintiffs had the burden of proof with regard to establishing agency against Dean, and tendered the following instruction to the trial court:

 

*44 “If you find that the plaintiffs have proved the propositions required of them as to Jaime Reeves, Alder Group, Inc., and Alco of Wisconsin, Inc., you must then determine whether Jaime Reeves was an agent of Dean Foods [Company].

 

If you find from your consideration of all the evidence that the plaintiffs have not proved that Jaime Reeves was an agent of Dean Foods [Company], then your verdict should be for Dean Foods [Company].

 

If you find that plaintiffs have proved each of the propositions they are required to prove against Jaime Reeves, Alder Group, Inc., and Alco of Wisconsin, Inc., and have further proved that Jaime Reeves was the agent of Dean Foods [Company], then your verdict should be for the plaintiffs and against Dean Foods [Company].”

 

The trial court refused Dean’s tendered instruction finding that the “If you find” language contained in IPI Civil No. 50.10 was sufficient to instruct the jury as to the burden of proof regarding the agency claims against Dean Foods Company.

 

¶ 195 However, the jury instructions when considered as a whole, fully and fairly advised the jury with respect to the burden of proof, because IPI Civil No. 21.01 advises the jury that anytime the expressions “if you find” or “you decide” are used, it means that the jury has to be persuaded on that point by a preponderance of the evidence.

 

¶ 196 IPI Civil No. 21.01 states as follows:

 

“When I say that a party has the burden of proof on any proposition, or use the expression ‘if you find,’ or ‘if you decide,’ I mean you must be persuaded, considering all the evidence in the case, that the proposition on which he has the burden of proof is more probably true than not true.” (Emphasis added.) Ill. Pattern Jury Instr.-Civ. 21.01.

 

¶ 197 Again, “the trial court has discretion to determine which instructions to give the jury and that determination will not be disturbed absent abuse of that discretion.” Schultz, 201 Ill.2d at 273, 266 Ill.Dec. 892, 775 N.E.2d 964. The majority has not demonstrated how the trial court abused its discretion. The majority writes that there was no direct evidence of agency and that’s why the burden of proof instruction was so important. “Direct evidence has been defined as evidence which, if believed, proves the existence of the fact in issue without inference or presumption.” People v. Christiansen, 118 Ill.App.2d 51, 56, 254 N.E.2d 156 (1969). “Direct evidence has been described as testimony of a person who has perceived the existence of a fact, sought to be proved or disproved, by means of his senses.” Christiansen, 118 Ill.App.2d at 56, 254 N.E.2d 156. Documents can also be direct evidence.   Gambino v. Boulevard Mortgage Corp., 398 Ill.App.3d 21, 70, 337 Ill.Dec. 257, 922 N.E.2d 380 (2009) (holding that “settlement documents are direct evidence of fraud”).

 

¶ 198 The direct evidence of agency is overwhelming in this case. However, the issue here has nothing to do with the evidence that was admitted, the issue is whether the trial court abused its discretion in refusing Dean Foods’ burden of proof instruction.

 

*45 ¶ 199 The direct evidence showed by testimony that Dean Foods had the right to control the actions of Alder/Alco’s drivers. ¶ 69, supra. At the time of the collision, the relationship between Dean Foods and Alder/Alco had been in place for 60 years, and that Alder/Alco “pulled” exclusively for Dean Foods. In 2000, Alder received the “Partners in Distribution Award” from Dean Foods. White, “Alder and Alco’s” assistant safety director and driver trainer at the time of the collision testified that he used letterhead that bore Dean Foods’ insignia with the notation “distributor of Dean Foods” in the performance of his job including the reprimand of drivers. The “Alder Companies Driving Manual,” which was admitted into evidence without objection, states that Alder/Alco drivers were part of Dean Foods’ fleet and instructs the drivers to wear Dean Foods clothing and act in a manner that will encourage positive opinions about Dean Foods. In particular, the manual states “When you step out of your truck, you are immediately recognized as DEAN FOODS.” Perhaps most importantly, Dean Foods owned the loaded trailer which Reeves was “pulling” at the time of the collision. ¶ 69, supra. In addition, the trucks bore Dean Foods’ insignia.

 

¶ 200 Since the majority cannot show us how the jury was confused with the instructions they received, it cannot be said that the trial court abused its discretion in denying Dean Foods’ tendered instruction. Even if the trial court abused its discretion in denying Dean Foods’ instruction, that denial could never rise to the level of denying them a fair trial.

 

¶ 201 For the reasons that I have stated, I must respectfully dissent, and I would affirm the judgment of the trial court.

 

FN1. Although Alder is no longer a party, the discussion of the issues and evidence reference them as necessary for our analysis.

 

FN2. Before the trial court, the parties agreed that Alco, Inc., is a former name of Alco of Wisconsin, Inc., which we shall refer to as “Alco” for this decision.

 

FN3. We acknowledge that the jury was instructed of a driver’s duties under Indiana law.

 

FN4. Although Dean Foods has not raised the issue of the jury instructions on joint venture, we point out that the trial court erroneously instructed the jury about the elements of a “joint enterprise” as defined in the IPI for “Automobile Guests—Joint Enterprise—Passengers.” See IPI Civil (2006) No. 72.04. However, this instruction is generally used for an exception to the general rule that the negligence of a driver may not be imputed to his passenger. Campanella v. Zajic, 62 Ill.App.3d 886, 887, 20 Ill.Dec. 33, 379 N.E.2d 866 (1978). Though similar, the elements for a joint enterprise are slightly different than the elements of a joint venture and this case did not involve whether Reeves and a passenger were engaged in a joint enterprise, but rather whether Dean Foods was part of a joint venture with Alder, Alco, and Reeves.