United States District Court, N.D. California, San Jose Division
ORDER ADDRESSING POST-APPEAL MATTERS RE: DKT. NOS.
J. DAVILA, UNITED STATES DISTRICT JUDGE.
7, 2019, the Ninth Circuit affirmed in part, reversed in
part, vacated, and remanded this Court's September 2017
Order Denying Defendant's Motion for Judgment as a Matter
of Law. The Parties construe the Ninth
Circuit's Memorandum differently, which the Court
resolves below. The Court finds this motion suitable for
consideration without oral argument. See N.D. Cal.
Civ. L.R. 7-1(b). Having considered the Parties' papers,
the Court holds that pursuant to the bar on double recovery,
Plaintiff may not recover contract and tort damages. However,
under the economic loss rule, Plaintiff may recover tort
damages instead of contract damages. The Court also holds
that the contractual cap on liability is not applicable to
such damages. Accordingly, Plaintiff is entitled to $309, 674
in fraud damages.
11, 2012, Plaintiff Simulados Software, Ltd. filed a
Complaint against Defendant Photon Infotech Private, Ltd.
alleging that Defendant breached the Parties' contract
and intentionally misrepresented its ability to complete the
contract. See generally Dkt. 1; see also
Short Statement of Case, Dkt. 135. The jury found for
Plaintiff on both claims and awarded Plaintiff $309, 674 for
each claim. See Judgment, Dkt. 167; see
also Verdict Forms, Dkt. 165.
renewed its motion for judgment as a matter of law. Dkt. 178.
Despite the jury award of contractual damages, the parties
had a negotiated provision that limited the amount of
contractual damages to the amount of money actually received
by the breaching party. Plaintiff paid Defendant $18, 848 for
Defendant's services, and so Defendant's liability on
the breach of contract claim was capped at $18, 848.
See Supplemental Brief Regarding Plaintiff Simulados
Software Ltd.'s “Election of Remedy” at 5,
Dkt. 193 (“[B]oth parties agree that the consideration
paid by [Plaintiff] was $18, 848.”).
the Court denied Defendant's motion for judgment as a
matter of law. The Court determined that sufficient evidence,
viewed in the light most favorable to the non-moving party,
supported the jury's findings of breach of contract and
fraud. Order Denying Defendant's Motion for Judgment as a
Matter of Law (“JMOL Order”), Dkt. 197. Defendant
questioned whether: (1) the fraud claim was sufficiently
independent of the contract to allow recovery under
California law for both fraud and breach of contract; and (2)
the contractual provision limiting damages applied to
Plaintiff's fraud claim. This Court determined it did not
need to address those issues because it granted
Plaintiff's request to rescind the contract and awarded
Plaintiff $18, 848 in consideration damages and $309, 674 in
consequential damages. Id. at 6.
appeal, the Ninth Circuit affirmed this Court's holdings
that sufficient evidence supported the jury's fraud and
breach of contract findings. Simulados Software, Ltd. v.
Photon Infotech Private, Ltd., 771 Fed.Appx. 732, 734
(9th Cir. 2019). The Ninth Circuit reversed and vacated this
Court's order granting rescission because Plaintiff
“failed to meet the notice requirement” required
to rescind a contract. Id. Defendant argued that the
panel should reduce the jury's award pursuant to the
contractual limitation on damages. Id. at 735. The
Ninth Circuit agreed “that there is an $18, 848 cap on
[Plaintiff's] recovery for breach of contract.”
Id. “It is undisputed that [Plaintiff] paid
[Defendant] $18, 848, and the contractual provision limits
damages to the amount that [Plaintiff] paid on the
contract.” Id. The Ninth Circuit, however, did
not address whether this provision applied to the fraud
damages or if Plaintiff could recover damages for both the
fraud and contract claim.
Bea concurred in the Memorandum Disposition but wrote
separately to note that he would include an instruction that
on remand, the district court should consider whether its
award of $309, 674 to Plaintiff based on the jury's fraud
verdict is duplicative of its separate award of $18, 848.
Id. The Parties' briefing focuses on this
question-may Plaintiff receive damages for both the fraud and
contract claims without violating the rule against
duplicative recovery? And, if yes, what effect does the
contractual provision limiting damages have on
Plaintiff's fraud claim?
August 9, 2019, Defendant filed a brief addressing the effect
of the Ninth Circuit's decision. Defendant Photon
Post-Appeal Opening Brief (“D Brief”), Dkt. 212.
Plaintiff filed its response brief on August 23, 2019.
Plaintiff Simulados Response to Defendant's Post-Appeal
Opening Brief (“P Brief”), Dkt. 214. On August
30, 2019, Defendant filed its reply brief. Defendant
Photon's Post-Appeal Reply Brief (“D Reply”),
is no dispute between the Parties that Plaintiff's
damages for the contractual claim is $18, 848. The Parties
dispute whether the Court may award Plaintiff $309, 674 in
fraud damages in addition to the $18, 848 in contract damages
or if such an award constitutes double recovery. D Brief at
7; P Brief at 6-7. Defendant argues that because Plaintiff
suffered only one loss, past economic damages, Plaintiff may
only recover one form of damages, i.e., either
contract or fraud damages. Plaintiff ...