Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01049/USCOURTS-casd-3_05-cv-01049-2/pdf.json

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

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1 05cv1049BTM(AJB)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

VANCE HILDERMAN, an individual;

HIGHRELY INC., a Delaware

corporation,

Plaintiffs,

CASE NO. 05cv1049 BTM(AJB)

ORDER DENYING ENEA’S MOTION

FOR SUMMARY JUDGMENT ON

HILDERMAN’S BREACH OF

vs. CONTRACT CLAIM

ENEA TEKSCI, INC., dba ENEA

embedded technology,

Defendants.

AND RELATED COUNTERCLAIMS 

Defendant Enea TekSci, Inc. (“Enea”) has filed a motion for summary judgment on

Vance Hilderman’s second claim for breach of contract. For the reasons discussed below,

Enea’s motion is DENIED.

I. BACKGROUND

The factual background of this case was set forth in the Court’s order filed on March

12, 2008, and need not be repeated here. In that order, the Court denied without prejudice

Enea’s motion for summary judgment on Hilderman’s breach of contract claim. The Court

explained that although Hilderman contended that he personally suffered damages from the

Case 3:05-cv-01049-BTM-AJB Document 99 Filed 06/02/08 Page 1 of 5
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alleged breach of the Severance Agreement, Hilderman had not detailed exactly what

damages he was claiming. The Court gave Enea leave to file a new motion for summary

judgment limited to the issue of Hilderman’s contract damages and cautioned Hilderman to

specify each and every element of his claimed damages.

II. DISCUSSION

Pointing to Hilderman’s Responses to Enea’s First Set of Interrogatories, dated

December 5, 2005, Enea argues that Hilderman was not personally damaged by the alleged

breach of contract. Responding to interrogatories regarding the amount of damages

Hilderman is claiming against Enea and how such damages were calculated, Hilderman

stated: “Vance Hilderman’s claims are identical to, based upon, and incorporate the

business damages accruing to HighRely, and Hilderman incorporates HighRely’s answers

to this interrogatory.” (Enea’s Ex. 2.)

 Based on Hilderman’s interrogatory responses, Hilderman seeks to recover damages

suffered by HighRely and did not personally suffer any damages. However, in his opposition

to Enea’s motion, Hilderman declares that he has suffered damages separate and apart from

HighRely. Specifically, Hilderman claims the following damages: (1) lost profits he would

have drawn under his profit-sharing agreement with HighRely (according to Hilderman, the

loss of the Hospira contract resulted in HighRely losing $1,000,000 in profit); (2) a loan in the

amount of $70,000 to HighRely which remains unpaid because HighRely does not have the

financial assets to repay the loan; (3) an annual salary of $95,000 for his services to

HighRely from 2005 to 2007 (Hilderman states he was budgeted to receive a $95,000 annual

salary for his services as President of HighRely but was never paid for the time he served

as President and was forced to step down as President in late 2005 as a result of “Ms.

Walker’s disparagement of my reputation with HighRely and the avionics certification

industry.”); (4) $79,333.00 in unpaid rent (HighRely is a tenant in an office building which is

owned by MHB Properties; Hilderman owns one-third of MHB Properties); (5) attorney’s fees

that are recoverable under the terms of the Severance Agreement.

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Enea contends that Hilderman should be bound to his interrogatory responses. Under

the “sham affidavit” rule, a party cannot create a triable issue of fact by introducing a sham

affidavit that contradicts his prior deposition testimony or interrogatory responses. School

District No. 1J, Multnomah County, Oregon v. ACandS, Inc., 5 F.3d 1255, 1264 (9th Cir.

1993). However, this rule should be applied with caution. Kennedy v. Allied Mutual Ins. Co.,

952 F.2d 262, 266-67 (9th Cir. 1991). This rule applies to “‘sham’ testimony that flatly

contradicts earlier testimony in an attempt to ‘create’ an issue of fact and avoid summary

judgment.” Id. at 267. “Therefore, before applying [the rule], the district court must make a

factual determination that the contradiction was actually a ‘sham.’” Id.

Although Hilderman’s declaration contradicts his earlier interrogatory responses, the

Court does not find that the declaration is a “sham affidavit.” Hilderman’s contention that he

has personal financial interests in relation to HighRely is not new. During his deposition on

May 15, 2007, Hilderman insisted that he had a financial interest in HighRely and had been

personally damaged by Enea’s actions. (Hilderman Dep. (Ex. C to Lucio Decl.), 31:11-15,

18-19.) Hilderman explained that he was a lender to HighRely and was still owed money on

the loans. (Hilderman Dep., 32:25-33:1.) He also explained that HighRely was a tenant on

property that he co-owned. (Hilderman Dep., 33:4.) When asked whether he had any other

financial interests in HighRely, Hilderman said, “No.” (Hilderman Dep., 33:21-22.) Hilderman

did not discuss a profit-sharing agreement. However, he may have believed that he had

covered the profit-sharing agreement by generally referring to his financial interest in

HighRely. He also did not mention that he was to receive a salary for serving as President

of HighRely. However, he did state that he served as President of HighRely. (Hilderman

Dep. 32:17-18.) Although Enea’s counsel asked Hilderman if he was paid as an employee,

Enea’s counsel never asked if the office of President was salaried. (Hilderman Dep., 32:21-

22.)

Because the Court does not find that Hilderman’s declaration is a “sham affidavit,” the

Court turns to the question of whether Hilderman has raised a triable issue regarding the

existence of breach of contract damages. Generally, the measure of damages for breach

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 To the extent the Court relies on Hilderman’s declaration, the Court overrules

Enea’s evidentiary objections. Enea objects that Hilderman’s statements regarding his

financial loss are inadmissible hearsay, lack documentary proof, and are speculative and/or

irrelevant. The hearsay objections are overruled because, for the most part, it appears that

Hilderman has personal knowledge of the facts stated. Furthermore, with respect to Enea’s

hearsay and documentary proof objections, at the summary judgment stage, we focus on the

admissibility of the evidence’s contents, not the admissibility of the evidence’s form. Fraser

4 05cv1049BTM(AJB)

of contract is “the amount which will compensate the party aggrieved for all the detriment

proximately caused thereby, or which, in the ordinary course of things, would be likely to

result therefrom.” Civ. Code § 3300. The test for causation is whether the breach was a

substantial factor in causing the damages. U.S. Ecology, Inc. v. State, 129 Cal. App. 4th

887, 909 (2005). “The term ‘substantial factor’ has no precise definition, but ‘it seems to be

something which is more than a slight, trivial, negligible, or theoretical factor in producing a

particular result.’” Id. (quoting Espinosa v. Little Co. of Mary Hospital, 31 Cal. App. 4th 1304,

1314 (1995). In addition, “[c]ontract damages are generally limited to those within

contemplation of the parties when the contract was entered into or at least reasonably

foreseeable by them at that time; consequential damages beyond the expectation of the

parties are not recoverable.” Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th

503, 515 (1994). 

The Court finds that there is a triable issue as to whether Hilderman may recover

damages as a result of Enea’s alleged breach of the Severance Agreement. According to

Hilderman’s evidence, Enea’s interference with the Hospira contract resulted in a huge

financial loss to HighRely. HighRely was unable to earn any profits and did not have the

funds to repay the loan from Hilderman, pay rent, or pay Hilderman’s salary. In addition,

Hilderman was deprived of payments under the profit-sharing agreement. Because the

Hospira contract was a major contract and was projected to bring in over $1,000,000 in profit

(Hilderman Decl. ¶ 12), the loss of this contract arguably was a substantial factor in

HighRely’s financial condition and inability to make payments to Hilderman. Furthermore,

it was arguably foreseeable that Hilderman would have made financial outlays for the benefit

of HighRely and would suffer financial loss if HighRely was prevented from soliciting

customers of Enea after the initial six-month period. 1

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28 v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003). The evidence is not speculative, for the

reasons discussed above, and is relevant. 

5 05cv1049BTM(AJB)

Therefore, the Court denies Enea’s motion for summary judgment on Hilderman’s

breach of contract claim. However, the Court cautions Hilderman that he is under a

continuing duty to supplement his discovery responses. Fed. R. Civ. P. 26(e)(1). To

the extent Hilderman has failed to supplement his discovery responses regarding his

breach of contract damages, Hilderman must do so within 20 days of the entry of this

order. If Hilderman fails to do so, he will be barred from presenting this evidence at trial.

III. CONCLUSION 

For the reasons discussed above, Enea’s motion for summary judgment on

Hilderman’s second claim for breach of contract is DENIED.

IT IS SO ORDERED.

DATED: June 2, 2008

Honorable Barry Ted Moskowitz

United States District Judge

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