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Sun Pacific Farming Cooperative, Inc. v. Sun World International

March 31, 2009

SUN PACIFIC FARMING COOPERATIVE, INC., PLAINTIFF,
v.
SUN WORLD INTERNATIONAL, INC., DEFENDANT.
SUN WORLD INTERNATIONAL, INC., A DELAWARE CORPORATION, COUNTER-CLAIMANT,
v.
SUN PACIFIC FARMING COOPERATIVE, INC., A CALIFORNIA CORPORATION; SUN PACIFIC FARMING CO., A CALIFORNIA CORPORATION; BERNE H. EVANS III; AND RICHARD PETERS, COUNTER-DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This matter came before the Court for bench trial on January 27, 2009, following the remand from the Court of Appeals for the Ninth Circuit, following vacation and remand for determination of the amount of punitive damages. Plaintiff, Sun Pacific Farming Cooperative, Inc., ("Sun Pacific") was represented by Klein, DeNatale, Cooper, Rosenlieb & Kimball, LLP, by T. Scott Belden, Esq. Plaintiff, Sun Pacific Farming Cooperative, Inc., a California corporation; Sun Pacific Farming Co., a California corporation; and Richard Peters were represented by The Webb Law Firm by Kent E. Beldauf, Jr., Esq.

Based on the undisputed facts set forth in the Final Pre-Trial Order, the Findings of Fact, and Conclusions of Law entered by the Court June 16, 2006, the Court of Appeals' Memorandum of Decision filed May 8, 2008, and the evidence and arguments presented by the parties at trial on January 27, 2009, including trial briefs, supplemental written argument, and Proposed Findings of Fact and Conclusions of Law on the issue of punitive damages, the Court makes the following Findings of Fact and Conclusions of Law. To the extent any Finding of Fact can be interpreted as a Conclusion of Law, or a Conclusion of Law can be interpreted as a Finding of Fact, it is so intended.

A. Relevant Procedural Background

Following a bench trial and the filing of Findings of Fact and Conclusions of Law, entered June 16, 2006, the trial court found Counter-Defendants Sun Pacific Farming Cooperative, Inc., Sun Pacific Farming Company, Berne H. Evans, III, and Richard Peters, liable to Sun World International, Inc., for intentional misrepresentation, conversion, and declaratory relief regarding the ownership of the Sugraone grape variety. The Judgment entered June 16, 2006, held each of the Counter-Defendants liable to Sun World for compensatory damages in the sum of $8,064.00, costs in the amount of $27,684.30, and punitive damages of $250,000.00.

By its Memorandum Decision filed May 8, 2008, the Court of Appeals affirmed the trial court's decision in all respects, except the amount of the punitive damages award specifically holding: "Roughly 31-to-1 ratio between the punitive damages award and compensatory damages award exceeds the outer limits that the Supreme Court has indicated would comport with due process. [A]lthough the misconduct at issue here is serious and intentional, it does not appear to be in the realm of the most egregious conduct that would otherwise support such a high damages ratio." The Court of Appeals remanded to the District Court for reconsideration and recalculation of the amount of the punitive damages award.

B. Findings of Fact

1. By written Agreement of Sale dated March 15, 1972, John Garabedian, Bertha Garabedian, Richard Peters, Barbara Peters, the Panoche Land Company, and the Peters & Garabedian Partnership sold specifically enumerated parcels of real estate, personal property and equipment, trademarks, patents and patent applications to Superior Farming Company.

2. The 1972 Agreement affected a transfer of "certain parcels of real property . . . certain personal property and equipment and certain patents, patent applications and trademark rights as follows:" which are listed and numbered paragraphs 1-3 of the first page of the 1972 Agreement. Those paragraphs recite the sale of specifically enumerated real property, Exhibits A, B, C, and D to Appendix 1 of the 1972 Agreement, personal property (Exhibit E to Appendix 1 of the 1972 Agreement), patents and patent applications (Exhibit F to Appendix 1 of the 1972 Agreement) and two trademarks for the total purchase and sale price of $7,711,750.00.

3. Exhibits A-D of the 1972 Agreement specifically listed the transferred real estate. Exhibit E of the 1972 Agreement lists, in 35 pages, the over-500 transferred items of personal property. Exhibit F to the '72 Agreement is a list of the transferred patents and patent applications.

4. The Superior Seedless Sugraone vines are not described or included in the 35 pages listing the personal property and equipment that was sold in the 1972 Agreement. (Exhibit E to the 1972 Agreement).

5. The Superior Seedless/Sugraone grape variety is not highlighted in the 1972 Agreement and no portion of the Agreement specifically discusses that grape variety.

6. The only mention in the Agreement of the Superior Seedless/Sugraone grape variety is contained in Exhibit F to Appendix A1 of the '72 Agreement which is the list of the transferred patents and patent applications. The patent application is referenced at the second page of Exhibit F to Appendix 1 of the 1972 Agreement (page 108), as "GRAPEVINE 'BRENDA W. WHITE')." Grapevines of such variety are not addressed or discussed in the 1972 Agreement.

7. Superior Farming understood that John Garabedian was negotiating on behalf of the Peters & Garabedian Partnership (which was legally owned by John Garabedian and Ed Peters [Defendant Richard's father]) for the items sold by the partnership, the trademarks, the remaining real estate, the specifically enumerated personal property and equipment, and the patents and patent applications included in the '72 Agreement were sold to Superior Farming by the Garabedians and a corporation controlled by the Garabedians.

8. Richard Peters was a party to the 1972 transaction only for the sale of two parcels of real estate to Superior Farming.

9. John Garabedian did not represent to Superior Farming that he was negotiating on behalf of Richard Peters.

10. Superior Farming made no inquiry as to who owned the properties on which the Superior Seedless/Sugraone vines were growing.

11. No Superior Farming representative discussed with Richard Peters the transfer of all Superior Seedless/Sugraone vines located on his real property.

12. Mr. Peters never represented to anyone from Superior Farming that all Superior Seedless/Sugraone vines growing on his property would be transferred to Superior Farming.

13. The issue of Richard Peters transferring all existing Superior Seedless/Sugraone vines on his real property was never raised by Superior Farming with Richard Peters.

14. Richard Peters specifically intended to retain a few Superior Seedless/Sugraone cuttings so that he could use them for cross-breeding purposes following the expiration of the Superior Seedless/Sugraone patent. He did not disclose this intent to Superior Farming.

15. Superior Farming paid a total of $7,711,750.00 for the 1972 asset purchase. None of the purchase price was allocated to the Superior Seedless/Sugraone grape variety.

16. The Mecca Ranch land on which cuttings from the Superior Seedless/Sugraone vines were planted, was not involved in ...


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