good morning may have please the court my name is sue handelman and i'm appearing on behalf of photon as this court is well aware this appeal arises following a trial concerning a contract for twenty three thousand five hundred dollars worth of software services that photon was to perform for simulate those and i'd like to first turn to the end part of the case which rescission after the trial was finished and a jury verdict was entered on fraud and on breach of contract the plaintiff decided that it would rescind the contract and in a post trial brief the court the opponent said we rescind and we take the contract out of existence and we asked the court to award rescission compensation which the court did but as i think was well established in briefing and i don't think it's controverted in california rescission is purely a statutory concept and other sixty ninety three right exactly sixteen seventy one has six hundred ninety one i'm sorry prescribes the steps that rescinding party has to go through and one of those is prompt a notice upon appreciation of a fraud that would void the contract or make it voidable and prompt a notice to the other side even if it's in a complaint and in this case it's undisputed that there was no notice there was no through three iterations of the complaint there was no even every one had never pled their no no prayer for recision it was sudden it was out of the blue and it was post trial which under quantum vs want vs who is impermissible the rescission was contrary to california law and therefore it is completely improper and the damages that the court awarded which were over five hundred thousand dollars in recession compensation must be  and isn't there some california authority on the issue of recession that says that if the rescission doesn't come promptly it still might be valid unless the opposing party shows some prejudice from the late decision what was your evidence on the motion for recision to the trial court post trial showing that there was some prejudice you received we went all the way through an entire trial the prejudice is in fact the court awarded attorney's fees to the other side of one hundred eighty six thousand dollars the prejudice was built in to the outcome of this matter by the incredible fees that were incur my by the opponent in pursuing his his non rescission damages and then getting paid for it well but it seems to me that cal civil code sixty ninety three says  denied because of delay in giving notice so shall not be denied a party just lays and seeking remedy may forfeit the right to rescind where delay substantially prejudiced so again we're back to judge bay as question what was your evidence before the district court not what do you say to us what was the evidence before the district court that you were substantially prejudiced in not the attorney knows they had been rewarded they had been awarded what was the prejudice you gave to this record yes the rescission was by complete surprise at the end of the case so not been done what was your evidence of prejudice there in the in the brief we address there was no specific heading or argument on prejudiced but this way did you  saying had we not here a contract in this case we would not have done the following steps in preparation of the case and we would not have done briefing we were not the structure and we spent a great deal of time and cost of the client in preparing a case against contract yes a any of that no there was no declaration to that effect however your honor if you look at the case law goes to just take it from our experiences former trial judges that it costs money to prepare a case and contract yes your honor if there is that and i appreciate that very much but there is also the notion that the court set forth in quantum vs who that procedurally this statutory provision cannot be asserted as a post trial matter it cannot come up as a it cannot be awarded  post trial not in this case and not in guam versus the village northridge case makes the supreme court makes the point that the that the person must and hear to the steps that are required by the us by the contract i might add that the point that your owners are are addressing to me about whether or not we address prejudice post trial was not raised by my opponent there is no argument that my opponent raised in his brief to the effect that they were entitled to res of you were dale were dealing with the first prong of rescission whether there was fraudulent to do some underdog and then when they asked to rescind it then you said no it has nothing to do with that it has to do with the doesn't follow all the steps necessary to get to rescind now and it was just a given that it was going to be prejudicial to you because there wasn't anything necessarily there that said any more than prejudice that a judge you've been through this trial forty dime's you ought to know how much prejudice or is look what we've gone through that's about we best we got you know that that's that's not quite what i was planning to offer you well we just tried to give it the best effort i could for you know well i would also add in addition to that kind of effort i would additionally add that during the case during the trial the pla ff was repeatedly intent on not rescinding what we have in this case is a trial judge who queried the plaintiff's attorney during the trial you say that you had fraud in the inducement and and what do you think the result of fraud in the inducement might be and the opponent said on the record to the trial judge we stand on the contract where we would want our damages for fraud when he read the damage limitation in the contract he says to change his tune indeed but that was that was that that was the motivating factor i have a feeling that we're we're both having the same argument in mind that is the fraud argument well if we're going to go to the fraud and you want to judgment as a matter of law of the fraud what's my standard or review standard  review on a rule fifty motion is whether or not there is evidence in the record to support a jury verdict for fraud ok so all we're looking for there is is there any evidence in this record whatsoever to support this and you're saying there's no evidence no evidence to support the fraud that is asserted by my opponent well adjusted minute what about the first one of these that we've got to talk about is was the application a better application than you already then he already add and a web application and can fail also test five this rep told him they were going to use this special tool call real basic to come up with this pro this product and then can tail testified photon representative that knowledge and experience to create the software there is a representation that's fal representations that your honor has referenced are in fact true well what is to minute they're the ones that didn't you didn't provide so what what your honor is i don't know what we're doing is we're just talking about now giving them every benefit of the doubt not you making your best argument for your side you know but their side is these are the representation that you put out there and they were provided and it didn't happen and so therefore they were misrepresentation those are elements of the contract you're on are just an avi i know you want to make it in elements of the contract but i let's talk about first of all can they be a part of the fraud that's what we've got to look at what are the elements of the fraud let's take those one by one a misrepresentation i've just gone this representation aid with falsity knowledge of the knowledge of could indicate it didn't have the knowledge or the experience to create the software photons e mail in february two thousand and ten in the cade said to tolkien tale about the risk of using real basic but can  fact where do we go with that ok that's giving them every benefit of the doubt we need to we need to talk about what fraud requires fraud requires and this statement of material facts on which the other side relies on the issue of whether or not going to reliance then is that where you are on one on the first issue on  falsity the question of whether or not real basic was a proper tool first of all the claim that the photon used a real basic perform the contract with real basic and it was a proper tool whether it was relied whether photons use of real basic was relied on is addressed in the record i'd ask your honour's to review my page one o one pardon me ma'am but i don't think you're really giving the opposition the full benefit that is necessary on a judgment as a matter of law you've got to take all of these allegations in the light most favorable to them not  i appreciate you want to make a different view on all of those representations because it will help you but i'm trying to help the jury's verdict now which i understand you're supposed to be doing and that's why i've led you down this path promise of the court has intenser vs super scope and and all of the cases that deal with the fraud in a contract context stat made and not fulfilled is not a promissory fraud we don't have we're not after promissory fraud here where after normal misrepresentation of fraud we don't have to talk about promissory fraud that's why i worried about your brief why do you go off on these different engines they argued the fraud misrepresentation of material fact knowledge of false of the and reckless disregard intent to reduce reliance justifiable reliance and resulting damage i don't have to go off on promissory fraud ok you are with with with respect i urge the court to take another look at the appellant's brief we addressed every form of fraud not just promissory fraud we would not want to go there stick with the one i got right here there was no fraud here because nothing that your honor mentioned even though the con the the promise she had was disappointed in the outcome of the contract there was no fraud by anything that was stated by photon including to me that you're trying to give me a jury you're trying to give me a jury argument again you made the same argument to the jury you're making to me i read the transcript and the jury said no you're wrong there is fraud and these were the dust statements they relied upon and i'm trying to say how could they not rely on them they could not rely on them because none of the statements are fa knowingly false at the time they were made and we pointed that out in our brief they are merely cantera contract promises that was a contract not fulfilled a false the record there is no evidence in the record that that that real basic was not a proper tool there is no evidence in the record that we lacked experience or expertise in fact the cause the evidence was to the contr that we had the experience we represented and that buying a training cd was in line with keeping up on changes in software development i see my time is up your honor and so i will  submit thank you all right gabie right my worry mind the court i'm from texas ok my worry is this supposing i say there is no rate way they should have been able to rescind for how late it was and how late it came and how there seems to be prejudice here what do i do then i think it comes down to us great election of remedies ya know we have to recover under one or the other just a minute if you can recover on we then i get rid of the second judgement by the court right we would which i was the one that got the rescission there was a judgement by the jury right judgment by the jury said there's fraud and you repeat the question there are any issues on appeal that relate to those two verdicts are there any issues before me that relate to those verdicts seems to me one of them is whether there can be any contracts will damages above the limitation right that's and you run across is there any other is there any issue as relates to the damages for fraud certainly whether or not it is that in front of me i believe the in front of the court your hon not going to do we're not going to do a judgment as a matter of law then it seems to me at that point the only issue i have and front of me is whether i'm going to do contracts will damages the full amount or the limitation and after that it's over isn't it that's in front of me in this case i believe that the plaintiff gets to let which women he wants to pursue whether it wants to pursue the fraud in the inducement the jury awarded or whether it wants to or accept that award from the very last second to do exactly what we've done and from the district court i don't have to make that decision here all i have to do and that's why i'm having you help me it seems to me that if i say no way that judge sic on the rescission at this particular point in time then i look at what else do i have in front of me while i have the j n o v on frog i got to give every benefit doubt to the jury so i may not do that seems to me we're back to the same point we were in front of the district court when your client decided to change its ideas and go for recision so i just sent it back and let the district court deal with that donor because then there would be absolutely an eight hundred thousand dollar limit and we would have a fraud and we would have the limit on the contract now but the judge did award the eight hundred thousand dollars limit on the contract and then i understand the word to three hundred thousand dollar limit of those are the three hundred thousand dollars reward on the fraud and then awarded the attorneys fees so by sending it back down to the trial court to simply make that change seems to me well i guess what i'm trying to figure out what's the issue what's the what's the issue i have to address i looked at every one of these issues and i said to myself a via dress the issues the attorneys give me rather than the issues i want to give wasn't clear to me whether the judge at the district court level actually blocked the rescission because he applied the contractual limitations and awarded the eighteen thousand dollars in damages on the breach of contract if we were has given to the offending party so eight hundred thousand dollars is correct on a decision their effort to distinguish one of the cases we were alive which was a lying telephone case let me ask you the limitations are in the contract right that's correct if the contract is valid and not rescinded your limited contract recovery by the limitations of office would be well if the limitation was valid we'd be limited on the contract corey but not on the recovery you've taken the words not in my mouth that's assuming that that toward recovery and rick recover for the pure economic loss right i believe that's correct so do i have to i believe the court trial court the district court characterizes as to consequential damages didn't just include lost profits and clukey damages that were necessary for hiring someone else she actually program the product and they program successfully so i believe that a minimal i believe what characterizes all those says as the consequential damages i appreciate that but i have to determine first of all whether he can even give those don't  then what you're suggesting is what are you suggesting is fraud is independent and separate from the contract will vary that is correct your honor and that is basically one of the things robinson helicopter discussed i which if you were and i'd always say baloney but go ahead were in hell for i just want to i've only got a few minutes left in stocks i want to briefly talk about that limitations provision in hawaiian telephone they contend that a wind telephone the product was never delivered but that it was delivered in this case and that's why there should be a distinction between the two but the product was not delivered in this case i believe the test more that only one of the three versions was delivered perhaps to put uncontroverted no web application was ever delivered to our client nor was it except that he rejected because of the numerous defects that were in the product so we don't have a delivery which don't trigger those limitations under i think the court is fully fully appreciates the complexity of the problem here and we did discuss the rescission we did discuss the fraud we didn't have a chance to discuss breach of contract but on the last point that was made by my opponent the hawaiian telephone case the the the opponent in their brief made the point that hawaiian telephone stands for the proposition that if the car if there is no delivery of a product then the limitation of damages clause doesn't apply but that isn't what hawaiian telephone stands for at all why in telephone stands for the proposition that there was a condition preceding in that case which was delivery  working system before a repair warranty kicked in and that was what was not triggered was the repair warranty so just to to make that clear and i think the court is correct that if there is a problem with rescission here which there is you are faced with the dramatic problem of what to do with a judgment for fraud for pure economic damages the exact amount of this damages that were for for breach of contract and also the same conduct that was involved in the breach of con contract that's why the jury came up with the same number and it would be a double because of course your honor we have briefed extensively the notion that what's left isn't anything that can be compensated under the law so and your honors i'm not here to to caused by the fraud yes there's no nobody has disputed that in the briefing the problem is prior to that the problem is is there any fraud here under the law well that is