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Copart, Inc. v. Sparta Consulting, Inc.

United States District Court, E.D. California

February 20, 2018

COPART, INC., Plaintiff,
v.
SPARTA CONSULTING, INC., KPIT INFOSYSTEMS, INC., AND KPIT TECHNOLOGIES LTD., Defendants. SPARTA CONSULTING, INC., Counterplaintiff,
v.
COPART, INC., Counterdefendant.

          ORDER

         Plaintiff Copart, Inc. moves for reconsideration of this court's summary judgment order. Mot., ECF No. 265; see Order Summ. J. at 23, ECF No. 264. Defendants oppose. Opp'n, ECF No. 283. Defendants have replied, Reply, ECF No. 285, and the court heard oral argument on the motion. ECF No. 287. The court now resolves this motion. For the reasons below, Copart's motion for reconsideration is DENIED.

         I. BACKGROUND

         In its summary judgment order, the court addressed defendant Sparta Consulting's motion for summary judgment on Copart's claims of fraudulent inducement, fraud and negligent misrepresentation. Order Summ. J. at 19-27. When laying out Copart's various theories for its fraud claims, the court described promissory fraud as equivalent to fraudulent inducement: “Promissory fraud or fraud in the inducement, a subspecies of fraud and deceit, has the same elements [as fraud and deceit] but also requires that the ‘defendant fraudulently induce[d] the plaintiff to enter into a contract.” Id. at 20. Later in the same order, the court stated, “Copart's fraudulent inducement claim requires a misrepresentation about a party's intent to perform on a promise for this element.” Id. at 23 (citing Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996)). Based on this requirement, the court limited Copart's fraudulent inducement claim to a single actionable representation out of the six representations Copart had identified for its fraud claims. Id. at 21-23.

         After the court issued its summary judgment order, Copart moved for reconsideration, contending the court committed clear error in stating, “Copart's fraudulent inducement claim requires a misrepresentation about a party's intent to perform on a promise . . . .” Order Summ. J. at 23; see Mot. at 4.

         II. LEGAL STANDARD

         District courts “possess[] the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient.” City of L.A., Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir.2001) (citations and emphasis omitted). In addition, Federal Rule of Civil Procedure 54(b) authorizes courts to revise “any order or other decision . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.”

         However, a “motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir.2009) (citation omitted). Clear error occurs where “the reviewing court . . . is left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)).

         The Ninth Circuit has held it is not an abuse of discretion to deny a motion for reconsideration merely because the underlying order is “erroneous, ” rather than “clearly erroneous.” McDowell v. Calderon, 197 F.3d 1253, 1255 n.4 (9th Cir. 1999). “Mere doubts or disagreement about the wisdom of a prior decision . . . will not suffice . . . . To be clearly erroneous, a decision must . . . [be] more than just maybe or probably wrong; it must be dead wrong.” Campion v. Old Repub. Home Prot. Co., Inc., No. 09-CV-748-JMA(NLS), 2011 WL 1935967, at *1 (S.D. Cal. May 20, 2011) (quoting Hopwood v. State of Tex., 236 F.3d 256, 273 (5th Cir. 2000)); see also Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (movant must demonstrate a “wholesale disregard, misapplication, or failure to recognize controlling precedent”).

         III. DISCUSSION

         A. Copart's Contentions

         Copart contends the court inappropriately conflated promissory fraud with fraudulent inducement. Specifically, Copart asserts the court committed clear error in its summary judgment order in stating, “Copart's fraudulent inducement claim requires a misrepresentation about a party's intent to perform on a promise . . . .” Order Summ. J. at 23. In that order, the court cited Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996). Id. Copart contends “that fraudulent inducement is not limited to the sort of proof that supports ‘promissory fraud'” under California law; “fraudulent inducement can be supported by the same evidence that establishes a general [fraud] claim.” Mot. at 4. To support this contention, Copart cites the following language in Lazar: “An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” 12 Cal.4th at 638. According to Copart, “the Lazar court never held that only promissory fraud could support a claim for fraudulent inducement.” Mot. at 9 (emphasis in original).

         A post-Lazar California Court of Appeal decision also has distinguished between “promissory fraud” and “fraud in the inducement or procurement through alleged misrepresentations of fact” when evaluating application of the parol evidence rule. Edwards v. Centex Real Estate Corp., 53 Cal.App.4th 15, 42 (1997). Copart contends “Lazar does not conflict with this distinction between” promissory fraud and fraudulent inducement. Mot. at 8.

         Copart directs the court's attention to California Civil Code sections 1572, 1709 and 1710. Reply at 1, 7; Mot. at 10. Section 1572 defines “actual fraud” as “any” of several acts, “committed by a party to the contract, or with his connivance, with intent to deceive another party thereto, or to induce him to enter into the contract.” One of the five enumerated acts is “[a] promise made without any intention of performing it, ” while the others involve untrue suggestions, false positive assertions, suppression of the truth, or “[a]ny other act fitted to deceive.” Cal. Civ. Code § 1572(1)-(5). Section 1710 defines “[a] deceit” in relation to section 1709, listing four enumerated acts identical to the first four acts listed in section 1572. And section 1709 states, “One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.” According to Copart, “[t]he Civil Code is clear that fraudulent inducement can be proven by conduct other than ‘[a] promise made without any intention of performing it.'” Reply at 7 (citations omitted).

         Copart also cites multiple decisions by federal district courts in California distinguishing between “promissory fraud” and “fraud in the inducement.” E.g., Oak Indus., Inc. v. Foxboro Co., 596 F.Supp. 601, 608-09 (S.D. Cal. 1984); It's Just Lunch Int'l, LLC v. Polar Bear, Inc., No. CIV.03-2485 WQH(JFS), 2004 WL 3406117, at *3 (S.D. Cal. Apr. 29, 2004). Those courts have drawn an explicit distinction between promissory fraud and fraud in the inducement when applying the parol evidence rule, prohibiting parol evidence for ...


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