Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-01946/USCOURTS-casd-3_13-cv-01946-6/pdf.json

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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THE SHERWIN-WILLIAMS COMPANY,

Plaintiff,

CASE NO. 13cv1946-LAB (WVG)

ORDER DENYING IN PART AND

GRANTING IN PART SHERWINWILLIAMS' MOTION FOR PARTIAL

SUMMARY JUDGMENT

vs.

JB COLLISION SERVICES, INC. et al.,

Defendants.

This dispute arises from a pair of supply contracts between Sherwin-Williams, a paint

company, and JB Collision Services, and JJT, Inc., automotive body shops owned by John

Tyczki. Sherwin-Williams has filed a motion for partial summary judgment. (Docket no. 127.)

I. Factual Background

A. JB Supply Agreement

The first communication between the parties occurred in June 2008 when a

Sherwin-Williams sales representative, Jose Garcia, approached Tyczki about a potential

exclusive automotive paint products supply contract. Tyczki became interested in

Sherwin-Williams' new water-based paint line—AWX. Garcia allegedly represented that AWX

was a tested, proven, and perfected product and, with it, a vehicle could go from "prime to

shine" in 50 minutes. In September 2008, JB and Sherwin-Williams entered into a Supply

Agreement (the "JB Supply Agreement"). 

- 1 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 1 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Under the JB Supply Agreement, JB was to purchase all of its requirements for

"Products" used at its body shops from Sherwin-Williams until the gross sales of its

purchases of "SW Paint Products" reached $1.3 million. This was the "Term" of the

agreement. "SW Paint Products" was defined in the contract as "automotive paints and

coatings manufactured and sold by Sherwin-Williams under the 'Sherwin-Williams label.'"

"Products" was defined as: "all automotive paints, coatings and related products, including,

without limitation, the following: (i) primers; (ii) top coats; (iii) hardeners; (iv) abrasives, tapes,

adhesives; and (v) all other associated products." In consideration of exclusivity,

Sherwin-Williams gave JB a discount on certain products and a $275,000 advanced

payment. The JB Supply Agreement stipulated that upon the occurrence of an "Acceleration

Event," such as early termination, JB was required to refund a pro-rata amount of the

advance payment. 

B. JJT Supply Agreement

In May 2011, JJT and Sherwin-Williams entered into a similar supply agreement (the

"JJT Supply Agreement"). The Term of the contract was to last until gross sales of SW Paint

Products to JJT reached $250,000. Sherwin-Williams made a $40,000 advance payment to

JJT, and the entire amount was to be refunded in the case of an Acceleration Event. Tyczki

signed a personal guaranty for consideration of the advance payment to JJT. 

C. Contract Performance

From September 2008 until early 2013, JB and JJT refinished about 12,000 vehicles

with Sherwin-Williams paint products. From the inception of the JB Supply Agreement until

Plaintiff filed suit for breach of contract in August 2013, Defendants filed four warranty claims

on vehicles painted with AWX. Since then, Defendants filed an additional 28 warranty claims. 

Defendants allege quality issues arose less than a month after entering the JB Supply

Agreement, when JB began experiencing color-match defects with AWX. Defendants allege

further that, during a meeting in September 2008, Sherwin-Williams admitted it had made

false representations about AWX's quality. After the meeting, Sherwin-Williams took AWX

out of JB's shops and installed a solvent-based paint line. Because JB hadn't contracted for

- 2 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 2 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

solvent-based products, Sherwin-Williams supplied them at no charge for the six months

between September 2008 and March 2009, at which point the AWX line was reinstalled. 

Starting again in July 2009, Defendants allege they had further complications with

AWX, including dieback—a defect that occurs when paint loses its shine. Defendants allege

they voiced their issues with the product line to Sherwin-Williams, usually to Garcia,

numerous times each year from 2009 until 2013. And, while Garcia would provide "goodwill

adjustments" to account for product defects, Defendants had to absorb the labor costs of

repainting vehicles. In 2012, Defendants allege Tyczki met in-person with Garcia and

Sherwin-Williams Vice-President David Sewell to discuss the problems. Tyczki alleges he

never heard back from Sewell despite a promise that he'd "get to the bottom" of the issues. 

Further, although Defendants contend they were repeatedly assured they were the

"only ones" experiencing issues with the AWX line, a number of other auto body shops

reportedly experienced similar issues. The cause of these issues, specifically Defendants'

problem with dieback, lies at the heart of Defendants' counterclaims. Defendants allege that

they encountered problems because AWX is defective. Sherwin-Williams maintains that the

product isn't defective, and the issues are within the painter's control.

Defendants allege that, beginning in March 2009, in response to the issues with the

AWX product line, Plaintiff provided on-site technical training to Defendants' painters and

eventually certified them for use of the AWX line. Defendants allege their problems persisted

and, in 2012, Sherwin-Williams proposed the adoption of a "30-60-90 Plan" which was

intended to improve Defendants' body shops by optimizing the area for painting vehicles. 

Ultimately, the 30-60-90 Plan was never completed because, in late 2012, Tyczki stated his

intention for Defendants to completely terminate their business relationship with

Sherwin-Williams upon completion of the Term of the JB Supply Agreement with JB, which

he contended would occur once gross sales on that account reached $1.3 million. 

D. Sherwin-Williams' Allegation that Defendants Breached

On February 28, 2013, Sherwin-Williams sent JB and JJT letters stating their belief

that both Defendants had breached their respective Supply Agreements by installing a

- 3 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 3 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

competitor's paint line in their body shops. Defendants maintain they didn't actually

discontinue their exclusive relationship with Sherwin-Williams until the end of March 2013,

once they believed they had satisfied the Supply Agreement's gross sales requirement. At

that time Defendants had purchased $1.3 million in Sherwin-Williams Products, but,

according to Sherwin-Williams, only about $900,000 worth of SW Paint Products. On April

3, 2013, Tyczki sent Sherwin-Williams a letter, enclosed with a $40,000 check refunding the

advance payment, stating that JJT was terminating its Supply Agreement as of April 8, 2013. 

Sherwin-Williams also alleges Defendants breached the Supply Agreements by

purchasing covered products from Keystone Automotive. Prior to entering into the Supply

Agreements, Defendants were in an exclusive contractual relationship with Keystone for the

supply of Spies-Hecker paint products. While Defendants claim this relationship ended in

2008, discovery revealed that they continuously purchased supplies from Keystone well into

2012.

Sherwin-Williams' lawsuit for breach of contract followed.

E. Defendants' Counterclaims

Defendants filed a counterclaim based on Sherwin-Williams' alleged defective

products and unfulfilled promises. (Docket no. 36.) It contains causes of action for breach

of contract, fraud, intentional misrepresentation, negligent misrepresentation, and unjust

enrichment. (Id.)

F. Sherwin Williams' Motion for Partial Summary Judgment

Sherwin-Williams' motion seeks:

(1) Summary judgment on its breach of contract claims against all Defendants;

(2) Summary judgment on Defendants' breach of contract claims;

(3) Summary judgment on Defendants' claim for consequential and incidental

damages;

(4) Summary judgment on Defendants' unjust enrichment claims;

(5) Summary judgment on Defendants' fraud claims;

(6) Summary judgment on Defendants' misrepresentation claims

- 4 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 4 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Defendants oppose Sherwin-Williams' motion, contending summary judgment is

improper and Sherwin-Williams isn't entitled to attorney's fees based on the indemnity

provision in the Supply Agreements.

II. Legal Standard

Summary judgment is appropriate where the evidence shows "there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law." 

Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the initial burden of informing

the court of the basis for its motion and of identifying those portions of the pleadings and

discovery responses that demonstrate the absence of a genuine issue of material fact. See

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All reasonable inferences from the

evidence are drawn in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 242 (1986). Where the moving party doesn't bear the burden of proof at trial,

it is entitled to summary judgment if it can demonstrate that "there is an absence of evidence

to support the nonmoving party's case." Celotex, 477 U.S. at 325.

If the moving party meets its burden, the burden shifts to the nonmoving party

opposing the motion, who must "set forth specific facts showing that there is a genuine issue

for trial." Anderson, 477 U.S. at 256. Summary judgment is warranted if a party "fails to

make a showing sufficient to establish the existence of an element essential to that party's

case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.

A genuine issue of fact exists if "the evidence is such that a reasonable jury could return a

verdict for the nonmoving party." Anderson, 477 U.S. at 248. A fact is material if it "might

affect the outcome of the suit under the governing law." Id.

III. Discussion

A. Breach of Contract Claims

1. Summary Judgment on the Parties Breach of Contract Claims

Sherwin-Williams seeks summary judgment on its breach of contract claims against

JB, JJT, and Tyczki. It also seeks summary judgment on Defendants' breach of contract

claims against it.

- 5 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 5 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Sherwin-Williams is correct that the plain language of the JB Supply Agreement

required JB to purchase $1.3 million in "SW Paint Products," and the parties agree that JB

didn't. See Wohl v. Swinney, 118 Ohio St. 3d 277, 280 (2008) ("When interpreting a

contract, we will presume that words are used for a specific purpose and will avoid

interpretations that render portions meaningless or unnecessary.").1

 Sherwin-Williams is also

correct that JJT didn't purchase $250,000 in "SW Paint Products," as required by the JJT

Supply Agreement, and the agreement doesn't limit potential damages to return of the

advance. The Court finds no support for Defendants' argument that Tyczki's personal

guaranty on the JJT Supply Agreement is unenforceable because he signed it before the JJT

Supply Agreement became binding. Indeed, Tyczki doesn't dispute that the terms of the JJT

Supply Agreement were known to him when he signed the guaranty.

But, summary judgment on the breach of contract claims is improper because issues

of fact remain regarding whether the AWX paint product Sherwin-Williams supplied to JB and

JJT was defective. As all parties agree, the Supply Agreement is a contract for the sale of

goods governed by the Uniform Commercial Code. (Docket no. 25 at 6); (Docket no. 143

at 16); see also Sherwin-Williams Co. v. Coach Works Auto Collision Repair Ctr., Inc., 2011

WL 709714, at *10 (D. Md. Feb. 22, 2011); Alaska Pac. Trading Co. v. Eagon Forest

Products, Inc., 85 Wash. App. 354, 359-60 (1997) (the UCC "replaced the common law

doctrine of material breach . . ."). Because the Supply Agreement "authorizes the delivery

of goods in separate lots to be separately accepted," it's an installment contract. Ohio Rev.

Code Ann. § 1302.70(A). Installment contracts are only "breach[ed] in the whole" when

"non-conformity or default with respect to one or more installments substantially impairs the

value of the whole contract." Id. at § 1302.70(C). In that case, the buyer may cancel the

contract, recover the price paid, "cover" by purchasing substitute goods, and recover

damages. Id. at § 1302.85(A). Thus, if Sherwin-Williams provided nonconforming products,

1

 The Supply Agreements are governed by Ohio law. But, the choice of law provision

is limited to claims arising from, or relating to, the contract. See Wehlage v. EmpRes

Healthcare Inc., 821 F. Supp. 2d 1122, 1127 (N.D. Cal. 2011). Thus, California law controls

the fraud-based claims. See Nat'l Seating & Mobility, Inc. v. Parry, 2011 WL 4831198 at *4

(N.D.Cal. Oct.12, 2011).

- 6 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 6 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

or otherwise defaulted, and thereby substantially impaired the value of the Supply

Agreements "in the whole," Defendants' performance would be excused and they could

maintain a lawsuit for Sherwin-Williams' breach.

The evidence presented by the parties is susceptible to multiple interpretations. As

Sherwin-Williams argues, a jury could view the low number of pre-suit warranty claims as

evidence that Sherwin-Williams didn't provide defective products or otherwise substantially

impair the value of the Supply Agreements. Conversely, a jury could view the warranty

claims, Defendants' claimed oral complaints, and the uninstallation of the AWX paint line in

JB's body shop as evidence that Sherwin-Williams did breach the contract as a whole.

McCullough v. Bill Swad Chrysler-Plymouth, Inc., 5 Ohio St. 3d 181, 186, 449 N.E.2d 1289,

1294 (1983) (stating that whether a defect amounts to substantial impairment is an issue of

fact). That's especially true because "notice of nonconformity or rejection of the goods by

the buyer need not be in any particular form and may be implied from conduct." Coach

Works, 2011 WL 709714, at *12 (internal quotation marks omitted). Sherwin-Williams'

motion for summary judgment on the breach of contract claims is DENIED.

2. Contract Damages Available to Defendants

In the Supply Agreements, Defendants disclaim any right to special, indirect,

incidental, or consequential damages. This is a valid waiver of warranties. See

Sherwin-Williams Co. v. JJT, Inc., 2014 WL 2587483, at *2 (S.D. Cal. June 10, 2014). While

Defendants don't contest the disclaimer's validity, they contend they're entitled to "direct

contract damages in the amount of the value in materials and labor costs for warranty work

that Defendants have performed and continue to perform in order to correct dieback defects

on customer vehicles caused by S-W's AWX paint products." (Docket no. 143 at 16.)

This sort of injury proximately resulting from a breach of contract falls squarely into

the definition of consequential damages. Ohio Rev. Code Ann. §§ 1302.86(B), 1302.88(B),

1302.89(B); cf. Contempo Metal Furniture Co. v. East Texas Motor Freight Lines, Inc., 661

F.2d 761, 765 (9th Cir. 1981) (labor costs wasted in an attempt to use materials damaged

in shipping are consequential damages). Thus, the damages Defendants can recover are

- 7 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 7 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

limited to the difference in value between the products received from Sherwin-Williams and

the value of those products as warranted under the Supply Agreement. See Nat'l Mulch &

Seed, Inc. v. Rexius Forest By-Products Inc., 2007 WL 894833, at *27 (S.D. Ohio Mar. 22,

2007).

3. Attorney's Fees Available to Sherwin-Williams

Citing a general indemnification provision in the Supply Agreements, Sherwin-Williams

contends Defendants must indemnify it for attorney's fees arising out of this lawsuit. (Docket

no. 127 at 3.) Courts are split on whether an indemnification provision authorizes the award

of attorney's fees with regard to claims between the parties to the agreement. NevadaCare,

Inc. v. Dep't of Human Servs., 783 N.W.2d 459, 471 (Iowa 2010) (collecting cases). Some

jurisdictions have found that "indemnification provisions do not authorize the award of

attorney fees with regard to claims between the parties to the agreement because

indemnification provisions only apply to third-party claims." Id. Ohio falls into this category.

Am. Premier Underwriters, Inc. v. Marathon Ashland Pipeline, LLC, 2004 WL 937316, *5

(Ohio Ct. App. 2004) ("The agreement contemplates that indemnity is available only for 'suits,

costs and expenses' brought by a third party and not for a dispute between the parties to the

agreement concerning the meaning of their contract."); Cf. Wilborn v. Bank One Corp., 121

Ohio St. 3d 546, 548 (2009) ("Attorney fees may be awarded when a statute or an

enforceable contract specifically provides for the losing party to pay the prevailing party's

attorney fees."). Thus, the indemnification provision doesn't provide Sherwin-Williams a basis

to collect its attorney's fees from Defendants in this case.

B. Unjust Enrichment Claim

"[A] claim for unjust enrichment may be pled in the alternative when the existence of

an express contract is in dispute and may be maintained despite the existence of an express

contract where there is evidence of fraud, bad faith, or illegality." (Docket no. 56 at 15)

(quoting Cheers Sports Bar & Grill v. DirecTV, Inc., 563 F. Supp. 2d 812, 819 (N.D. Ohio

2008)). The Court explained it interprets Cheers to stand for the proposition that, whether or

not the existence of an express contract is up for debate, an unjust enrichment claim may

- 8 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 8 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

be pled in the alternative where there are also allegations of fraud. Id. Sherwin-Williams now

seeks summary judgment on Defendants' unjust enrichment claim, contending it arose

before October 1, 2010, so it's time barred under the three year statute of limitations for fraud

claims.

The statute of limitations on a cause of action doesn't begin to run until "all of its

elements" have occurred. Pooshs v. Philip Morris USA, Inc., 51 Cal. 4th 788, 797 (2011).

"Under Ohio law, a plaintiff must prove the following elements to succeed in an action for

unjust enrichment: (1) a benefit conferred by the plaintiff upon the defendant, (2) defendant's

knowledge of the benefit, and (3) improper retention of the benefit without the defendant's

rendering of payment to plaintiff for same." Cheers, 563 F. Supp. 2d at 819 (internal

quotation marks omitted). The parties' allegations are susceptible to multiple interpretations

regarding when Sherwin-Williams' retention of the benefits of the Supply Agreements

became unjust. For example, Defendants allege the JJT Supply Agreement wasn't entered

until May 2011, and that, from 2011 through 2013, Sherwin-Williams verbally assured

Defendants that they would correct the alleged defects. (Docket no. 36, ¶¶ 20(h)-(l). From

these allegations, a jury could determine that Defendants' unjust enrichment claim didn't

accrue until October 1, 2010, or later. Thus, Sherwin-Williams' motion for summary judgment

on Defendants' unjust enrichment claim is DENIED.

C. Fraud and Misrepresentation Claims

Defendants allege Sherwin-Williams made knowing misrepresentations from 2008 to

2013. These alleged misrepresentations fall into two categories: (1) false statements about

the quality of Sherwin-Williams' products and (2) ultimately unfulfilled promises to cure

defects. (Docket no. 56 at 7.) The misrepresentations are the basis for Defendants' causes

of action for fraud, intentional misrepresentation, and negligent misrepresentation. 

Sherwin-Williams moves for summary judgment on these claims, contending: (1) the majority

of the fraud allegations are time barred; (2) Defendants can't establish the scienter or intent

to defraud elements of misrepresentation; and (3) Defendants can't establish the justifiable

reliance element of misrepresentation.

- 9 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 9 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1. Statute of Limitations

Pursuant to California Code of Civil Procedure § 338(d), there is a three-year statute

of limitations for "[a]n action for relief on the ground of fraud or mistake," which "is not

deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting

the fraud or mistake." "[T]he elements of intentional misrepresentation, or actual fraud, are:

(1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge

of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and

(5) resulting damage." Rodriguez v. JP Morgan Chase & Co., 809 F. Supp. 2d 1291, 1296

(S.D. Cal. 2011) (internal quotation marks omitted). "Since a cause of action accrues when

the elements of the cause of action, including damage occur, the appreciable and actual

harm that results in accrual must be harm of the specific type that is recoverable as damages

on that type of cause of action." Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 522 F.3d 1049,

1054 (9th Cir. 2008) (internal quotation marks omitted). "Although this ordinarily occurs on

the date of the plaintiff's injury, accrual is postponed until the plaintiff either discovers or has

reason to discover the existence of a claim, i.e., at least has reason to suspect a factual

basis for its elements." Id. (internal quotation marks omitted).

The Court previously explained that "any claim accruing on or after October 1, 2010

will not be barred by the statute of limitations." (Docket no. 56 at 10.) Defendants allege

Sherwin-Williams made fraudulent misrepresentations both before and after this date. 

(Docket no. 36, ¶¶ 17-20).

Sherwin-Williams now argues that any fraud claims based on misrepresentations

made before October 1, 2010 are time-barred. Defendants correctly point out that the statute

of limitations doesn't accrue until all elements of fraud occur, and argue that they didn't know

of their damages until they were sued by Sherwin-Williams and "learned that [it] had been

lying to them all along." (Docket no. 143.) But, this is contradicted by Defendants'

allegations that, in 2008, Sherwin-Williams admitted it made false representations to induce

JB to enter into the JB Supply Agreement. (Docket no. 36, ¶ 20(c),(d),(f).) And, since

Defendants allege they absorbed the labor costs associated with repainting vehicles due to

- 10 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 10 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

product defects (id., ¶ 20(g)), they can't claim they weren't aware of the damages stemming

from these misrepresentations. Thus, the representations made to induce Defendants to

enter the JB Supply Agreement are time barred. Issues of fact remain regarding when the

claims arising out of the remainder of the alleged misrepresentations accrued. 

Sherwin-Williams' motion for summary judgment on Defendants' fraud claim on statute of

limitations grounds is GRANTED IN PART AND DENIED IN PART.

2. Scienter

"The intent element of promissory fraud entails more than proof of an unkept promise

or mere failure of performance." Mazed v. JP Morgan Chase Bank, NA, 2014 WL 1364929,

at *6 (C.D. Cal. Apr. 7, 2014) (internal brackets and quotation marks omitted). "If [a claimant]

adduces no further evidence of fraudulent intent than proof of nonperformance of an oral

promise, he will never reach a jury." Id. (internal brackets and quotation marks omitted). 

Based on this authority, Sherwin-Williams alleges Defendants haven't gone beyond alleging

an unkept promise. It is wrong. Defendants allege Sherwin-Williams told them they were

the "only ones" experiencing defects, but later learned that multiple other Sherwin-Williams

customers experienced, and complained to Sherwin-Williams about, product defect issues. 

From this evidence, a jury could conclude Sherwin-Williams acted with knowledge of falsity

and intent to defraud. Sherwin-Williams' motion for summary judgment on Defendants' fraud

claim for lack of scienter is DENIED.

3. Justifiable Reliance

 Sherwin-Williams also contends that any reliance by Defendants wasn't reasonable. 

"Except in the rare case where the undisputed facts leave no room for a reasonable

difference of opinion, the question of whether a [claimant's] reliance is reasonable is a

question of fact." Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239 (1995). This

isn't the rare case. Defendants allege numerous misrepresentations, and whether they

justifiably relied on them is an issue of fact for trial. Sherwin-Williams' motion for summary

judgment on Defendants' fraud claim for lack of justifiable reliance is DENIED.

/ / /

- 11 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 11 of

 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IV. Conclusion

Sherwin-Williams' motion for summary judgment on the breach of contract claims and

unjust enrichment claims is DENIED. Its motion for summary judgment on Defendants' fraud

claims is GRANTED IN PART AND DENIED IN PART. The alleged misrepresentations made

to induce Defendants to enter the JB Supply Agreement are time barred.

IT IS SO ORDERED.

DATED: June 29, 2015

HONORABLE LARRY ALAN BURNS

United States District Judge

- 12 - 13cv1946

Case 3:13-cv-01946-LAB-WVG Document 173 Filed 06/30/15 PageID.<pageID> Page 12 of

 12