United States District Court, N.D. California
ORDER ON TRIAL PREPARATION RE: DKT. NOS. 128, 129,
131
SUSAN
ILLSTON UNITED STATES DISTRICT JUDGE
The
Court is in receipt of the parties’ amended joint
proposed findings of fact and conclusions of law, as well as
each party’s separate proposed findings of fact and
conclusions of law. Dkt. Nos. 128, 129, 131. Upon review of
these submissions, the Court urges the parties to consider
the applicable remedies for each cause of action alleged, and
the fact that double recovery is barred as a matter of
California law for the same type of damage:
Regardless of the nature or number of legal theories advanced
by the plaintiff, he is not entitled to more than a single
recovery for each distinct item of compensable damage
supported by the evidence. Double or duplicative recovery for
the same items of damage amounts to overcompensation and is
therefore prohibited.
Thus, for example, in a case in which the plaintiff’s
only item of damage was loss of commissions, two awards of
damages identical in amount-one for breach of contract and
the other for bad faith denial of the same contract-could not
be added together in computing the judgment. Plaintiff was
entitled to only one of the awards.
Tavaglione v. Billings, 4 Cal.4th 1150, 1158-59
(Cal. 1993) (internal citations omitted).
Accordingly,
the parties are ORDERED to review the Court’s below
damage analysis and consider whether the remaining 8 causes
of action, currently set to be tried over the course of 3
days, should be further streamlined.
The
operative question before the Court appears to be whether the
evidence in this case supports the finding of a contract, or
whether the Court will imply a contract in law where no
written contract existed.[1] It is well-established that contract
damages seek to make the injured party whole, while
quasi-contract damages are obligations created by law to
restore the aggrieved party to his former position by return
of the thing (in this case, labor) or its equivalent in
money:
Quasi-contract is simply another way of describing the basis
for the equitable remedy of restitution when an unjust
enrichment has occurred. Often called quantum
meruit, it applies where one obtains a benefit which he
may not justly retain . . . . The quasi-contract, or contract
implied in law, is an obligation created by the law without
regard to the intention of the parties, and is designed to
restore the aggrieved party to his former position by return
of the thing or its equivalent in money. The so-called
contract implied in law in reality is not a contract.
Quasi-contracts, unlike true contracts, are not based on the
apparent intention of the parties to undertake the
performances in question, nor are they promises. They are
obligations created by law for reasons of justice.
McBride v. Boughton, 123 Cal.App.4th 379, 392 n.6
(Cal.Ct.App. 2004) (internal quotation marks, alterations,
and citations omitted); see also Ilkhchooyi v. Best,
37 Cal.App.4th 395, 412 (Cal.Ct.App. 1995) (reasoning that
contract damages aim to make the injured party whole).
There
are four categories of damages that the Court can ascertain
from the causes of action that remain in this case.
Virtually all of them are entirely duplicative.
First,
should the Court find an enforceable contract, there will be
expectancy damages[2] on the contract pursuant to breach of
express contract (Count 1) or breach of
implied-in-fact contract (Count 2) or breach of the
implied covenant of good faith and fair dealing (Count 3).
“A contract is either express or implied.” Cal.
Civ. Code § 1619. “An express contract is one, the
terms of which are stated in words.” Cal. Civ. Code
§ 1620. “An implied contract is one, the existence
and terms of which are manifested by conduct.” Cal.
Civ. Code § 1621. “[I]mplied-in-fact contracts are
. . . more accurately described as express contracts proved
by circumstantial evidence.” Desny v. Wilder,
46 Cal. 2d 715, 739 n.9 (Cal. 1956). In California,
“with the exception of bad faith insurance cases, a
breach of the covenant of good faith and fair dealing permits
a recovery solely in contract.” Spinks v. Equity
Residential Briarwood Apartments, 171 Cal.App.4th 1004,
1054 (Cal.Ct.App. 2009); see also Cates Construction,
Inc. v. Talbot Partners, 21 Cal.4th 28, 43, 46 & n.9
(Cal. 1999); Jonathan Neil & Associates, Inc. v.
Jones, 33 Cal.4th 917, 938 (Cal. 2004). Punitive damages
are not recoverable for breach of the implied covenant of
good faith and fair dealing in cases, such as this one, that
do not involve insurance policies. See Cates
Construction, 21 Cal.4th at 61.
Second,
should the Court not find an enforceable contract, there may
be quasi-contract damages pursuant to equitable remedies;
here, implied-in-law contract (Count 2) or quantum
meruit (Count 5) or restitution/unjust
enrichment (Count 8). An implied-in-law or quasi-contract
theory bases its damages recovery on quantum meruit
or restitution considerations, which may, in practice,
closely track the underlying but otherwise invalid contract.
See Rutherford Holdings, LLC v. Plaza Del Rey, 223
Cal.App.4th 221, 231 (Cal.Ct.App. 2014) (“An action
based on an implied-in-fact or quasi-contract cannot lie
where there exists between the parties a valid express
contract covering the same subject matter. However,
restitution may be awarded in lieu of breach of contract
damages when the parties had an express contract, but it was
procured by fraud or is unenforceable or ineffective for some
reason. Thus, a party to an express contract can assert a
claim for restitution based on unjust enrichment by alleging
in that cause of action that the express contract is void or
was rescinded.” (internal quotation marks, alterations,
and citations omitted); Los Angeles Equestrian Ctr., Inc.
v. City of Los Angeles, 17 Cal.App.4th 432 (Cal.Ct.App.
1993) (reasoning that a contract implied in law is based on
quantum meruit or restitution considerations);
Weitzenkorn v. Lesser, 40 Cal. 2d 778, 794 (Cal.
1953) (“Quasi contractual recovery is based upon
benefit accepted or derived for which the law implies an
obligation to pay. Where no benefit is accepted or derived
there is nothing from which such contract can be
implied.” (internal quotation marks and citations
omitted)).
Third,
plaintiff has alleged a theory of promissory estoppel (Count
4), which, if successful, awards reliance
damages.[3] Reliance damages calculate “the
amount expended [by the nonbreaching party] on the faith of
the contract, ” but the plaintiff should not be put
“in a better position than he would have occupied had
the contract been fully performed.” Agam, 236
Cal.App.4th at 105-106 (internal quotation marks and
citations omitted). In practice, “[t]here appears to be
no rational basis for distinguishing [the cause of action
from contract] in terms of the damages that may be recovered;
both may involve the problem of ascertaining a future loss of
profits, actually a problem of presenting adequate
proof.” Toscano, 124 Cal.App.4th at 692. In
other words, complete contractual recovery may overlap with
reliance damages and “include, under some
circumstances, loss of profits when the loss is definite
rather than speculative.” Id. Given that
promissory estoppel is equitable in nature, the Court retains
broad judicial discretion to fashion remedies in the
interests of justice. Id. at 693.
Fourth,
plaintiff has alleged a cause of action pursuant to the
California Independent Wholesale Sales Representatives
Contractual Relations Act (Count 14).[4] This cause of action
provides that “[a] manufacturer, jobber, or distributor
who willfully fails to enter into a written contract as
required by this chapter or willfully fails to pay
commissions as provided in the written contract shall be
liable to the sales representative in a civil action for
treble the damages proved at trial.” Cal. Civ. Code
§ 1738.15. Simple compensatory damages are available for
a non-willful violation of the Act, however, and would
constitute double recovery if the Court finds defendant
liable and awards expectancy damages on the contract,
or restitution/quantum meruit on the implied-in-law
contract, or reliance damages on a theory of
promissory estoppel. Baker v. Am. Horticulture Supply,
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