Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-04535/USCOURTS-cand-5_03-cv-04535-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ARSAPE S.A.,

Plaintiff,

 v.

JDS UNIPHASE CORP.,

Defendant.

 /

AND RELATED COUNTERCLAIM AND

THIRD PARTY COMPLAINT

 /

NO. C 03-4535 JW

ORDER GRANTING IN PART AND

DENYING IN PART JDSU’S MOTION

FOR SUMMARY JUDGMENT, PARTIAL

SUMMARY JUDGMENT AND PARTIAL

JUDGMENT ON THE PLEADINGS;

DENYING ARSAPE’S MOTION FOR

SUMMARY JUDGMENT ON COUNT II

OF COMPLAINT; GRANTING ARSAPE

AND DMT’S MOTION FOR SUMMARY

JUDGMENT ON JDSU’S EXPRESS

CONTRACTUAL INDEMNITY CLAIM;

GRANTING ARSAPE AND DMT’S

MOTION FOR SUMMARY JUDGMENT

ON JDSU’S EQUITABLE INDEMNITY/ 

CONTRIBUTION CLAIM; DENYING

ARSAPE AND DMT’S MOTION FOR

SUMMARY JUDGMENT ON JDSU’S

CLAIMS RESPECTING ASSIGNMENT 

I. INTRODUCTION

Plaintiff Arsape S.A. (“Arsape”) filed suit against Defendant JDS Uniphase Corporation (“JDSU”)

alleging breach of contract and various other claims based upon the cancellation of certain purchase orders

between Defendant JDSU and Plaintiff’s alleged assignor, Donovan Micro-Tek (“DMT”). JDSU

responded by filing counterclaims against Arsape and a third party complaint against DMT, each containing

substantially similar allegations. 

Presently before the Court are numerous motions for summary judgment, partial summary

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1

 Any objections to evidence cited in this Order are overruled. Any objections to evidence not

cited in this Order are deemed moot.

2

judgment, and judgment on the pleadings. The motions were heard on October 3, 2005 and submitted for

decision.

II. BACKGROUND1

Arsape manufactures and sells electrical products, and is incorporated under the laws of

Switzerland with its principal place of business in Switzerland. DMT is Arsape’s United States distributor,

organized under the laws of California with its principal place of business in California. JDSU sells fiber

optic communications equipment, and is incorporated in Delaware with its principal place of business in

California. 

In 1997, JDSU and DMT discussed JDSU’s need for customized stepper motors that JDSU

would integrate into its voltage control attenuator (“VCB”) as part of its fiber optic communications

equipment offerings. In particular, the parties discussed developing a custom leadscrew that would operate

with JDSU’s plastic nut. In this lawsuit, the parties strongly dispute whether and to what extent any rights

and obligations arose as a result of the discussions over the development and manufacturing of the custom

leadscrew. Arsape’s complaint contains an allegation that JDSU “demand[ed] that Arsape build substantial

inventories of changing new raw materials and place corresponding firm materials procurement

commitments, so as to place Arsape in the position to ramp up its production dramatically just as soon as

the newest tinkering was accomplished.” Complaint, ¶15. Further, the complaint contains allegations that

JDSU “instruct[ed] [Arsape] to obtain and make firm purchase orders in the very large quantities that

would bring the lowest unit price.” Id. Arsape allegedly complied with the demands and instructions “in

reliance upon [JDSU’s] continual assurances, promises and enticements that a justifying and reasonable

commercial compensation was at hand.” Id. at ¶16. In contrast, JDSU contends that the parties were

engaged in a “development effort,” and that it issued purchase orders to DMT for prototypes and stepper

motors as well as for non-recurring engineering charges, that resulted in over $3 million payments to DMT.

It is undisputed, however, that JDSU issued at least two purchase orders to DMT: (1) a July 19,

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2

 The Terms and Conditions specified that the construction, interpretation and performance of the

Purchase Order were to be governed by the applicable laws of the Province of Ontario and Canada. 

3

2000 order number 185096 for 42,500 stepper motors, with weekly deliveries of 2,500 stepper motors

beginning September 4, 2000 and ending December 28, 2000 (hereinafter “July 2000 Purchase Order”);

and (2) a September 5, 2000 order number 195312 for 30,000 stepper motors, with weekly deliveries of

3,000 stepper motors starting January 4, 2001 and ending March 8, 2001 (hereinafter “September 2001

Purchase Order”).

JDSU’s Terms and Conditions, which were attached to the Purchase Orders, contained numerous

relevant provisions relating to, among other things, inspection, rejection, and cancellation of product; late

delivery; choice of law2; indemnity; assignment or transfer of rights or obligations; the scope of liability for

special, consequential, incidental, exemplary or indirect costs; and waiver of remedies. Significantly, the

parties dispute the force and effect of the JDSU Terms and Conditions.

JDSU began receiving stepper motors at its Ontario facilities. DMT eventually failed to meet the

delivery dates set forth in the Purchase Orders, however. On March 12, 2001, JDSU requested a

proposal for a revised delivery schedule to supply the undelivered stepper motors. On March 14, 2001,

Arsape supplied JDSU with a proposed revised delivery schedule. On April 5, 2001, JDSU sent an e-mail

advising Arsape that it would be canceling the Purchase orders. The next day, on April 6, 2001, JDSU

sent written notification that is was canceling the purchase orders. 

In July 2003, DMT allegedly entered into an agreement to assign all of its potential claims against

JDSU to Arsape for ten dollars and did not retain any interest in the claims. Arsape, in turn, assumed all

liability that may arise from the assignment and control of the litigation, and filed suit against JDSU. The

complaint contains the following claims: (1) breach of a contract for the sale of specially manufactured

goods spanning 1997 to 2001; (2) breach of contract based upon purchase orders; (3) promissory

estoppel; (4) restitution; (5) “modification of contract”; (6) waiver; (7) “Breach of Contract -

Prevention/Hindering of Performance”; (8) “Waiver and Excuse - Prevention/Hindering of Performance”;

(9) “Breach of Contract - Absence of Good Faith and Fair Dealing”; and (10) “Breach of Contract -

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Absence of Good Faith and Fair Dealing.” Complaint, pp. 8- 13. Arsape seeks damages in excess of

$1,300,000, as well as special, consequential, incidental, exemplary and indirect costs, expenses or

damages, including attorneys’ fees.

JDSU answered, asserting nineteen affirmative defenses, and filed counterclaims for declaratory

relief, breach of contract, breach of the implied covenant of good faith and fair dealing, express contractual

indemnity, equitable indemnity and contribution. JDSU also filed a third party complaint against DMT,

asserting nearly identical claims for breach of contract, breach of the implied covenant of good faith and fair

dealing, express contractual indemnity, and equitable indemnity and contribution.

There are numerous motions presently before the Court. JDSU moves for summary judgment on

all ten claims. In the alternative, JDSU moves for partial summary judgment on Arsape’s first and third

through tenth claims; judgment on the pleadings on Arsape’s sixth, seventh, and eighth claims; partial

summary judgment on Arsape’s claims for special, consequential, incidental, exemplary and indirect costs,

expenses or damages, including litigation costs and attorneys’ fees; and partial summary judgment limiting

Arsape’s damages to, at most, those cancellation costs incurred during the thirty day period following April

5, 2001. JDSU’s motion raises essentially seven arguments: that Arsape is not the real party in interest; that

the assignment between DMT and Arsape is invalid; that as a matter of law, Arsape’s breach of contract

claim for the development effort must be summarily adjudicated because it ignores the parties’ written

agreement on the subject; that as a matter of law, Arsape’s equitable claims must be summarily

adjudicated; that JDSU is entitled to judgment on Arsape’s “affirmative defenses” claims; that as a matter of

law, Arsape’s claims for special, consequential, incidental, exemplary or indirect costs, expenses or

damages, including litigation costs and attorneys’ fees, are prohibited by the contract between the parties;

and that Arsape’s claim for cancellation charges is limited to the 30 days after April 5, 2001.

Arsape moves for summary judgment on the breach of purchase order claim on the grounds that

JDSU violated paragraph 8 of the Terms and Conditions, or alternatively, that JDSU failed to provide

timely notice of any purported breach. Further, Arsape and DMT move for summary adjudication on the

assignment issue raised in JDSU’s motions. Arsape and DMT also move for summary judgment on

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JDSU’s express contractual indemnity claims, equitable indemnity, and equitable contribution claims,

contending that these claims are not supported by the Terms and Conditions.

III. STANDARDS

A. Judgment on the Pleadings

Rule 12(c), Fed.R.Civ.P., provides: "After the pleadings are closed but within such time as not to

delay the trial, any party may move for judgment on the pleadings." The standard applied on Rule 12(c)

motions is essentially the same as applied on motions brought pursuant to Federal Rule of Civil Procedure

12(b)(6): judgment on the pleadings is appropriate when even if all material facts in the pleading under

attack are true, the moving party is entitled to judgment as a matter of law. Hal Roach Studios v. Richard

Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1990). In deciding whether to grant a motion for judgment

on the pleadings, not only are the material facts alleged in the complaint assumed to be true, but all

inferences reasonably drawn from the facts must be construed, and all doubts resolved in favor of the

nonmoving party. McGlinchy v. Shell Chemical Co., 845 F.2d 802 (9th Cir. 1988); General Conference

Corp. of Seventh-Day Adventists v. Seventh-Day Adventists Church, 887 F.2d 228, 230 (9th Cir. 1989). 

The Court need not, however, assume the truth of legal conclusions in the complaint merely because they

take the form of factual allegations. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). 

B. Summary Judgment

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material

fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The

purpose of summary judgment "is to isolate and dispose of factually unsupported claims or defenses." 

Celotex v. Catrett, 477 U.S. 317, 323-324 (1986).

The moving party "always bears the initial responsibility of informing the district court of the basis

for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine

issue of material fact." Id. at 323. If he meets this burden, the moving party is then entitled to judgment as a

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matter of law when the non-moving party fails to make a sufficient showing on an essential element of his

case with respect to which he bears the burden of proof at trial. Id. at 322-23.

The non-moving party "must set forth specific facts showing that there is a genuine issue for trial. "

Fed. R. Civ. P. 56(e). The non-moving party cannot defeat the moving party's properly supported motion

for summary judgment simply by alleging some factual dispute between the parties. To preclude the entry

of summary judgment, the non-moving party must bring forth material facts, i.e., "facts that might affect the

outcome of the suit under the governing law . . . Factual disputes that are irrelevant or unnecessary will

not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The opposing party

"must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita

Elec. Indus. Co. v. Zenith Radio , 475 U.S. 574, 586 (1986).

The court must draw all reasonable inferences in favor of the non-moving party, including questions

of credibility and of the weight to be accorded particular evidence. Masson v. New Yorker Magazine,

Inc., 501 U.S. 496, 520 (1991) (citing Anderson, 477 U.S. at 255); Matsushita, 475 U.S. at 588; T.W.

Elec. Serv. v. Pac. Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). It is the court's responsibility "to

determine whether the 'specific facts' set forth by the nonmoving party, coupled with undisputed

background or contextual facts, are such that a rational or reasonable jury might return a verdict in its favor

based on that evidence." T.W. Elec. Serv., 809 F.2d at 631. "[S]ummary judgment will not lie if the

dispute about a material fact is 'genuine,' that is if the evidence is such that a reasonable jury could return a

verdict for the nonmoving party." Anderson, 477 U.S. at 248. However, "[w]here the record taken as a

whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for

trial.'" Matsushita, 475 U.S. at 587.

IV. DISCUSSION

A. The Assignment: Whether Arsape is a Real Party in Interest

In its summary judgment, JDSU contends that Arsape has no standing to pursue any breach of

contract claims because DMT, and not Arsape, was a party to the Purchase Orders. JDSU contends that

the purported assignment of rights between Arsape and DMT is invalid because the Terms and Conditions

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3

 Furthermore, the choice of law issue cannot be definitively resolved until the force and effect of

the Terms and Conditions are resolved.

7

prohibit such an assignment absent JDSU’s consent. See Terms and Conditions, ¶13 (“Seller may not

assign or transfer any right or obligations hereunder without the prior written consent of JDSU”). JDSU

contends that DMT and Arsape failed to seek, and JDSU did not give, the required consent.

In their motion on “JDSU’s Claims Respecting the Assignment,” Arsape and DMT contend that the

Terms and Conditions do not apply because the parties’ contract for the sale of goods had already been

concluded orally prior to the issuance of the Purchase Orders, including the Terms and Conditions; that

those documents constituted JDSU’s proposal to alter the already-concluded contract; and as such, the

proposal is not legally binding for a variety of reasons. See Arsape’s Supplementary Brief on Governing

Law. Further, Arsape appears to argue in the alternative that even if the Terms and Conditions are legally

binding, the particular portion of those Terms and Conditions prohibiting assignment does not apply to

assignments of purely causes of action. 

The Court finds that there is a conflict in the evidence with respect to whether DMT and/or Arsape

agreed to abide by the Purchase Order Terms and Conditions.3 On the one hand, JDSU persuasively

argues that the Purchase Orders, including the Terms and Conditions, constitute the only contract agreed to

by JDSU and DMT. Furthermore, Arsape acknowledges and indeed relies upon the Terms and

Conditions to support some of its claims in this lawsuit. On the other hand, Arsape and DMT contend that

the contract for the sale of goods had already been concluded orally prior to the issuance of the Purchase

Orders, including the Terms and Conditions. California Commercial Code §2201(3) provides that a

contract for the sale of specially manufactured goods need not be in writing. Arguably, the stepper motors

constituted specially manufactured goods. Arsape and DMT have submitted copies of JDSU’s purchase

orders stamped “Confirmation Only,” as evidence of the alleged oral contract entered into prior to issuance

of the Purchase Orders. To the extent the Terms and Conditions were not part of the preexisting oral

contract, they arguably constituted a proposal for “additional terms” under California Commercial Code

§2207, which did not become part of the contract because they constituted a material alteration. 

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4

 The fifth, ninth and tenth claims do not specify whether they are based upon a modification of the

oral contract described in claim one or based upon the contract memorialized by the Purchase Orders.

5

 Arsape and DMT’s position appears to be supported by California law. See Cal. Commercial

Code §2201(3)(a).

8

Accordingly, the parties’ respective motions for summary adjudication of the assignment issue are denied. 

B. JDSU’s Motion for Summary Judgment on Claims 1, 5, 9 and 10 

Arsape’s first claim is predicated on an alleged agreement that was formed in 1997 and continued

until 2001, and expressed by an integration “(1) of an assemblage of numerous documents and other

communications that passed between [the parties] and (2) through [the parties’] conduct, behavior, and

their course of performance.” Complaint, ¶28. This alleged agreement is “broader” than the Purchase

Orders, and was “superimposed” over the Purchase Orders. Complaint, ¶29. The fifth claim is for

modification of contract; the ninth and tenth claims are for breach of the covenant of good faith and fair

dealing.4

JDSU contends that the first, fifth, ninth and tenth claims fail because there is no evidence of the

alleged oral agreement; that in any event, the alleged agreement fails to satisfy the statute of frauds, as

codified at California Commercial Code §2201; and further, that parol evidence cannot be introduced to

contradict or vary the Purchase Orders. To the contrary, Arsape and DMT contend that they have

presented evidence of the oral agreement; that the law does not require the agreement to be in writing; and

their evidence does not violate the parol evidence rule.

For purposes of the present motion only, the Court assumes, without deciding, that a contract for

the sale of specially manufactured goods need not be in writing, as Arsape and DMT have asserted.5 

Nevertheless, under any parties’ choice of law, Arsape has the burden of proving that there was an oral

contract. There is no evidence upon which Arsape can rely to meet its burden. Arsape cites to the

declarations of Jacques Richard, Gaylord A. Virden, and Rob Renshaw to support its position. None of

these references, however, supply evidence of the who, what, when, and where of the alleged oral

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6

 Furthermore, the citations are inadequate and below standard practice insofar as they lack any

references to specific paragraphs, page numbers, or line numbers. 

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contract.6 For example, Jacques Richard’s declaration describes discussions regarding development of the

leadscrews without providing any specifics. Instead, Jacques Richard states in his declaration that he was

“instruct[ed] and re-instruct[ed] to tinker and finagle with the Arsape leadscrew”; and that Arsape and

DMT went through a “protracted four-year, blind, trial and error hunt for a custom leadscrew that would

work to JDSU’s and Smile’s subjective satisfaction.” Decl. of Jacques Richard, ¶¶12, 15. Jacques

Richard states that he was instructed to “ramp up production”; and to “build substantial inventories of

changing new raw materials and place corresponding firm materials procurement commitments.” Id. at

¶¶30, 40. However, no details are provided regarding, for example, when to ramp up; how much

inventory to build up; and what type of materials to procure and in what quantities. The only evidence of the

who, what, when, and where of any contract between the parties is set forth in the written Purchase

Orders. Therefore, the Court grants JDSU’s motion for summary judgment on claims one, five, nine, and

ten.

C. JDSU’s Motion for Summary Judgment on Equitable Claim 3

The third claim is for promissory estoppel. Arsape alleges that JDSU “by means of its promises

induced DMT and/or Arsape to act to the detriment of one, the other or both to design and redesign the

goods mentioned, manufacture special goods, manufacture work in process of special goods, build

inventories of special materials and make firm commitments to procure special materials, knowing or able

clearly to foresee that DMT and/or Arsape would so act, which they did; injustice can be avoided only by

enforcement of Defendant’s promises.” Complaint, ¶36. 

 JDSU contends that the claim must fail because promissory estoppel is not available where the

parties had a written, bargained for agreement supported by consideration which covered the performance

in question. Building Services Co. v. National Railroad Passenger Corp., 305 F.Supp.2d 85, 96 (D.D. C.

2004). Arsape and DMT contend that the promissory estoppel claim is supported by Restatement of

Contracts, Second, §§344(b) and 349. 

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To recover under the doctrine of promissory estoppel, a party must establish (1) a promise, clear

and unambiguous in its terms; (2) reliance on the promise; (3) reliance that was both reasonable and

foreseeable; and (4) injury due to the reliance. Van Hook v. Southern California Waiters Alliance, Local

17, 158 Cal.App.2d 556, 570 (1958). Despite the voluminous evidentiary record, the only evidence of a

clear and unambiguous “promise” between the parties is contained in the written Purchase Agreements. 

Therefore, the Court grants summary judgment on the third claim for promissory estoppel.

D. JDSU’s Motion for Summary Judgment on Equitable Claim 4

The fourth claim is for restitution. Arsape alleges that it “is entitled to recover against Defendant for

the design and redesign of special goods, manufacture of special goods, manufacture of work in process of

special goods, building of inventories of special materials and making of firm commitments to procure

special materials, and related acts and circumstances.” Complaint, ¶39.

 JDSU contends that the claim fails because neither Arsape nor DMT conferred a benefit to JDSU

that was not already paid for by JDSU. Arsape and DMT contend, however, that they are entitled to

compensation that “covers expenditures and the other financial consequences of its preparation – putting

itself in the position to perform the contracts – including the two purchase orders cancelled.” Response of

Arsape and DMT to JDSU’s Motion, p.11.

As discussed previously, there is simply no evidence of any agreement between the parties other

than the Purchase Orders. To the extent the parties had any further business dealings, the undisputed

evidence shows that JDSU paid over $3 million for all delivered stepper motors, prototypes and nonrecurring engineering charges. Erskine Decl., ¶¶4, 7. Therefore, the Court grants JDSU’s motion for

summary judgment on claim four for restitution. 

E. JDSU’s Motion Judgment on the Pleadings as to Claims 6, 7, 8

In its sixth, seventh, and eighth claims, Arsape seeks recovery under various theories such as

waiver, excuse and prevention and/or hindrance of performance. JDSU contends that the three claims are

essentially affirmative defenses, and therefore provide no basis for recovery.

The Court agrees with JDSU’s position. Claims six, seven, and eight essentially set forth affirmative

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defenses and do not provide a basis for recovery. Therefore, JDSU’s motion is granted. Claims six,

seven, and eight are ordered dismissed. The Court regards claims six, seven and eight as affirmative

defenses pled against JDSU’s counterclaims. Nothing in the Court’s ruling is intended to preclude Arsape

or DMT from asserting waiver, excuse, and prevention or hindrance of performance as affirmative

defenses. 

F. JDSU’s Motion re Damages

In its complaint, Arsape seeks special, consequential, incidental, exemplary or indirect costs,

expenses or damages. JDSU contends that all of these types of damages are precluded by paragraph 12 of

the Purchase Orders’ Terms and Conditions, which provides:

In no event shall JDSU . . . be liable to seller for special, consequential, incidental,

exemplary or indirect costs, expenses or damages including without limitation litigation

costs, the loss of production or profit arising from any cause whatsoever, even if advised of

the possibility of such costs or damages or even if such costs or damages is alleged to arise

from negligent acts, omissions or conduct of JDSU . . . . In no event shall JDSU’s liability to

seller under this agreement exceed amounts actually paid to seller for the products.

Terms and Conditions, ¶12. JDSU further asserts that it is not liable for any cancellation costs pursuant to

paragraph 8 of the Terms and Conditions, which provides:

JDSU may, at any time, cancel, terminate, suspend performance of, or issue a hold on,

elect to suspend (collectively “Cancellation”), the PO, in whole or in part, without Seller’s

consent, and, if applicable, JDSU agrees to negotiate in good faith a reasonable

compensation amount. Notwithstanding the foregoing, where JDSU provides Seller with

notice of Cancellation of a PO at least thirty (30) days prior to the scheduled delivery date,

JDSU shall have no liability or obligations to Seller whatsoever. 

Terms and Conditions, ¶8. 

The Court treats JDSU’s motion as a motion to strike under Rule 12(f), Fed.R.Civ.P. As

discussed previously in connection with the assignment issue, there is a genuine dispute over whether the

Terms and Conditions became part of the parties’ contract. Therefore, JDSU’s motion is denied with

respect to the issue of damages. 

G. Arsape’s Motion for Summary Judgment on Claim2 – Breach of the Purchase Orders

Arsape moves for summary judgment on its claim for breach of the Purchase Orders under two

different theories. First, Arsape contends that under paragraph 8 of the Terms and Conditions, JDSU was

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required, but failed to, “negotiate in good faith a reasonable compensation amount.” Second, Arsape

contends in the alternative that under California and Ontario law, JDSU was required, but failed to, provide

notice of any breach of the Purchase Orders, including any delay in deliveries. Arsape reasons that under

either of these two theories, it is entitled to a judgment that JDSU breached the Purchase Orders.

JDSU contends that paragraph 6 entitled “Late Delivery,” and not paragraph 8 of the Terms and

Conditions governs because Arsape failed to meet its delivery obligations. Paragraph 6 provides as

follows:

Seller shall notify JDSU as soon as it becomes aware that it cannot meet the delivery date

specified on the face of the PO and shall propose a new delivery date. In the event of such

delay, Supplier shall, at no additional cost to JDSU, employ accelerated measures such as

material expediting fees, premium transportation costs or labour overtime to ensure the

Products are delivered on or before the revised delivery date. In the event a delay in

delivery or the new delivery proposed by Seller is not acceptable to JDSU, in addition to

any other rights and remedies that may be available to it at law, JDSU may cancel the PO

without any liability whatsoever to Seller.

Terms and Conditions, ¶6. JDSU contends that in light of the late deliveries, it has no liability whatsoever

to Arsape. With respect to Arsape’s alternative argument, JDSU contends that it was not required to

provide notice of any breach of the Purchase Orders because of the nature of the breach, namely nondelivery. JDSU reasons that the law does not require notice of a breach based upon non-delivery because

under such circumstances, the breach should be self evident to both parties to the contract.

As discussed previously, there is a genuine issue of material fact regarding the force and effect of

the Terms and Conditions. This alone forecloses summary judgment on claim two. 

H. Arsape’s Motion for Summary Judgment on JDSU’s Express Contractual Indemnity Claim

JDSU’s counterclaim against Arsape and third party complaint against DMT include a claim for

express contractual indemnity pursuant to the Terms and Conditions of the Purchase Orders. In the

counterclaim against Arsape, JDSU alleges that if Arsape is the assignee of DMT, JDSU “is entitled to

indemnification from Arsape for all otherwise recoverable damages, expenses and costs it incurs in

connection with the lawsuit.” JDSU’s third party complaint against DMT includes a similar allegation that

JDSU “is entitled to indemnification from DMT.” 

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7

 Arsape and DMT’s Motion for Summary Judgment On JDSU’s Express Contractual Indemnity

Claim, p. 5.

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Arsape and DMT contend that paragraph 10 of the Terms and Conditions does not provide for

express contractual indemnity in the manner pled by JDSU, and therefore they are entitled to judgment on

the express contractual indemnity claims. They reason that JDSU’s claims for express indemnity are

“ludicrous”7 because they seek indemnity from Arsape for Arsape’s alleged breach, or alternatively

indemnity from DMT for DMT’s alleged breach.

Based upon the undisputed evidence, Arsape and DMT are entitled to summary judgment on

JDSU’s claims for express contractual indemnity. Paragraph 10 of the Purchase Orders’ Terms and

Conditions provides as follows:

Seller agrees to indemnify and hold harmless JDSU . . .from any and all loss, damage,

liability, cost . . . or any other expense of whatever nature (collectively “Claims”) arising out

of any act or omission of Seller (including negligence) directly or indirectly relating to the

PO, the use or sale of the Products, whether alone or in combination, or work performed

pursuant to the PO. The foregoing includes without limitation any Claims relating to

allegations, actions or proceedings for breach of contract, in tort (including negligence),

intellectual property infringement, any statutory, regulatory or other legal claims, claims for

bodily injury (including death) and damage to property. Seller agrees to furnish, upon

request by JDSU, evidence of comprehensive general liability insurance with minimum limits

of $US1,000,000. In the event of material change or cancellation of Seller’s insurance

coverage, seller shall ensure JDSU is given thirty (30) days prior written notice by either

Seller or Seller’s insurance company. 

As the language cited above makes clear, the duty to indemnify and hold harmless is triggered by claims

arising out of the acts or omissions of DMT directly or indirectly relating to the Purchase Orders. Arsape’s

instant complaint against JDSU cannot fairly be characterized as arising out of the acts or omissions of

DMT. Rather, Arsape is attempting to step into the shoes of DMT to seek recovery against JDSU for

JDSU’s alleged breach of contract. JDSU has asserted defenses based upon allegedly improper acts or

omissions by DMT; however, these defenses do not change the fundamental character of Arsape’s claim. 

Therefore, the Court grants summary judgment on JDSU’s express contractual indemnity claims.

I. Arsape and DMT’s Motion for Summary Judgment on JDSU’s Equitable Indemnity/Contribution Claim

JDSU’s counterclaim against Arsape and third party complaint against DMT include claims for

“equitable indemnity/contribution.” These claims are legally flawed for the same reasons the express

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contractual indemnity claims are flawed. Accordingly, the Court grants summary judgment on JDSU’s

equitable indemnity/contribution claims.

V. CONCLUSION

JDSU’s motion for summary judgment, partial summary judgment and partial judgment on the

pleadings is granted in part and denied in part as follows. JDSU’s motion is denied with respect to the issue

of assignment. JDSU’s motion is granted with respect to claim one, five, nine, and ten. JDSU’s motion is

also granted as to claims three and four. JDSU’s motion is also granted as to claims six, seven and eight. 

JDSU’s motion is denied with respect to the issue of damages. 

Arsape’s motion for summary on claim two is denied. Arsape and DMT’s motion for summary

judgment on JDSU’s express contractual indemnity claims is granted. Arsape and DMT’s motion for

summary judgment on JDSU’s equitable indemnity/contribution claims is also granted. Lastly, Arsape and

DMT’s motion for summary judgment on JDSU’s claims respecting assignment is denied.

Dated: November 3, 2005

03cv5435sj

/s/James Ware 

JAMES WARE

United States District Judge

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THIS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Nicole P. Dogwill ndogwill@graycary.com

Jeffrey J. Lederman jlederman@graycary.com

Gaylord A. Virden gavyls62@msn.com

Dated: November 3, 2005 Richard W. Wieking, Clerk

By:_/s/JW Chambers________

Ronald L. Davis

Courtroom Deputy

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