Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-00553/USCOURTS-cand-3_05-cv-00553-12/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

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UNITED 

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DISTRICT 

COURT

For the Northern District of California

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UNITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SUNNYSIDE DEVELOPMENT COMPANY, LLC,

Plaintiff,

v.

 OPSYS LIMITED,

Defendants,

 /

No. C 05 0553 MHP

MEMORANDUM & ORDER

Re: Defendant’s Motion for Judgment

as a Matter of Law and for a New

Trial

Plaintiff Sunnyside Development Company, LLC (“plaintiff” or “Sunnyside”) filed this

breach of contract action against defendant Opsys Limited (“defendant” or “Opsys Ltd.”) in the

California Superior Court for the County of Alameda on December 14, 2004. Defendant removed

the action to this court on February 7, 2005. The matter proceeded to jury trial on February 21,

2007. On March 9, 2007 the jury returned a verdict in favor of plaintiff. Defendant now moves for

judgment as a matter of law and for a new trial. Having considered the parties’ arguments and

submissions, and for the reasons stated below, the court enters the following memorandum and

order.

BACKGROUND

The factual background of this action is set forth in this court’s order on defendant’s motion

for summary judgment. Sunnyside Dev. Co. v. Opsys Ltd., No. C 05 0553 MHP, 2007 WL 419865

(N.D. Cal. Feb. 6, 2007) (Patel, J.). That order denied defendant’s motion for summary judgment in

all respects, and the matter proceeded to trial shortly after the order was entered. During the preCase 3:05-cv-00553-MHP Document 225 Filed 08/29/07 Page 1 of 8
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trial proceedings and the trial itself, this court made a number of rulings which defendant now

challenges. First, the court ruled, based on its summary judgment order, that defendants were not

entitled to pursue the defense of waiver. Second, the court declined to submit defendant’s proposed

instruction regarding the defense of unclean hands to the jury. Finally, at the close of evidence,

plaintiff made a motion for judgment as a matter of law pursuant to Rule 50(a), seeking a judgment

that defendant’s equitable estoppel claim was unsupported. The court granted this motion, and thus

the jury did not consider the factual issues related to equitable estoppel.

Shortly before delivering the verdict, the jury submitted the following request to the court:

“CLARIFICATION OF QUESTION 1 b ON VERDICT FORM. PLEASE CLARIFY ‘EFFECTIVE DATE’ IF

ASSIGNMENT IS VALID OR NOT VALID.” Bunzel Dec., Exh. A. Question 1(b) on the form asked

whether defendant made material representations and warranties in an Assignment agreement

between the parties that were inaccurate at the time of the effective date of the assignment. After

receiving this request, the court discussed the request with counsel for both parties and then called

the jury into the courtroom to address them directly. The court directed the jury’s attention to

paragraph 2 of the Assignment, and then the following exchange took place.

THE COURT: . . . It says the effective date of this assignment

shall be the date on which all conditions precedent the lessor’s consent

to this assignment as set forth in paragraph 6 below have been

satisfied. And then you look to paragraph 6 and what that says as

well.

I’m not sure if I can do any better then [sic] answer that —

answer the question in that way and also tell you look at the exhibits

that are relevant to this, if I found others that are relevant and also the

instructions and the — particularly the instructions on assignment and

novation and excuse of condition and the instructions on contract

interpretation. Is there something else you’re looking for?

THE FOREPERSON: Do we have to answer the question?

THE COURT: Well, not my question I’m asking you now, but

the one in the form?

THE FOREPERSON: Yes.

THE COURT: Yes. You need to answer all of the questions

here. So is there a problem with answering it or is it a question of a

divided vote?

THE FOREPERSON: It’s a — 

THE COURT: If it’s a divided vote don’t tell me how it’s

divided.

THE FOREPERSON: It’s a problem with answering the

question as it’s written.

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THE COURT: Did Opsys Limited make material

misrepresentations and warranties in the assignment and lease of

consent of lessor that were inaccurate and did they do that, in other

words, if you find, first of all, did they do that, number one.

Number two, did they do that at the time of entering into the

Assignment and did they do that at the time of the effective date of the

assignment.

Is it — would it be better to say within the range of time for

which the assignment become [sic] effective?

THE FOREPERSON: Yes. Or within 90 days of the initial

date of the assignment.

THE COURT: Of the date of entering into it because the date,

the 90 days runs from the date of entry into the assignment, so within

that, that would be correct, within that 90 days were any material

representations or warranties made that were inaccurate.

Bunzel Dec., Exh. B at 7:25–9:16. A brief discussion then ensued, over plaintiff’s counsel’s

objection, between defense counsel and the court in which defense counsel attempted to clarify that

the Assignment could have become effective at any time within 90 days of entering into the

Assignment. Id. at 9:17–11:1. Following this exchange, the court stated:

THE COURT: Could have been effective earlier, it could have

been at the time it became effective or at the date which it was to be

effective, and but after 90 days you going to read the rest of this

section to know that in the event not all the conditions precedent have

been satisfied and 90 days have passed, then the assignment is null and

void.

Okay, does that help? Would you — Okay. Anything else?

Bunzel Dec., Exh. B at 11:2–11:9. The Foreperson responded “No,” and the jury was then excused

to continue deliberating. Id. at 11:10–15.

Shortly thereafter, the jury returned its verdict. The verdict form contained five questions,

the first of which was compound. The pre-printed verdict form stated that (1) defendant made

material representations in the Assignment that were inaccurate at the time of the effective date of

the Assignment (but not at the time of entering into the Assignment), (2) the Assignment did not

effectively transfer the lease from Opsys Limited to Opsys U.S., (3) defendant breached the lease,

(4) defendant’s breach caused plaintiff to suffer damages, and (5) plaintiff’s damages amounted to

$4,853,017.

Defendant now claims that the verdict is inconsistent, and that defendant was improperly

denied the opportunity to present its defenses of equitable estoppel, waiver and unclean hands.

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LEGAL STANDARD

I. Judgment As a Matter of Law

Under Federal Rule of Civil Procedure 50, a court may grant judgment as a matter of law on

any claims for which “there is no legally sufficient evidentiary basis for a reasonable jury to find for

that party on that issue.” Fed. R. Civ. P. 50(a)(1). In ruling on a motion for judgment as a matter of

law pursuant to Rule 50, a court must consider all evidence presented, drawing all reasonable

inferences in favor of the nonmoving party, without making credibility determinations or weighing

the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51 (2000). In

evaluating this evidence without making credibility determinations, the court must “disregard any

evidence favorable to the moving party which the jury is not required to believe.” Id. at 151.

II. New Trial

Federal Rule of Civil Procedure 59(a) provides that a new trial may be granted “for any of

the reasons for which new trials have heretofore been granted in actions at law in the courts of the

United States.” A new trial is appropriate to prevent “fundamental unfairness or a miscarriage of

justice.” City of Phoenix v. Com/Sys., Inc., 706 F.2d 1033, 1036 (9th Cir. 1983). Such unfairness

may be found where “the verdict [is] against the weight of the evidence, . . . the damages are

excessive, or . . . [there were] alleged substantial errors in admission or rejection of evidence or

instructions to the jury.” Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940). 

Determining whether such unfairness exists is left to the sound discretion of the district court. Id.

DISCUSSION

I. Plaintiff’s Procedural Challenge

Plaintiff claims that defendant’s Rule 50(b) motion for judgment as a matter of law is

procedurally improper because plaintiff failed to make a Rule 50(a) motion at the close of evidence

on the same grounds. The requirement that a party move under Rule 50(a) before moving under

Rule 50(b) is applied strictly in this Circuit. Janes v. Wal-Mart Stores Inc., 279 F.3d 883, 886–87

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(9th Cir. 2002). The only ground upon which defendant seeks judgment as a matter of law is the

inconsistent jury verdict. Defendant’s remaining arguments, related to its affirmative defenses, are

submitted in support of its request for a new trial. Needless to say, defendant could not have made a

motion based on the jury’s verdict before the action was submitted to the jury.

Although defendant mentions judgment as a matter of law throughout its argument related to

the jury verdict, defendant’s overall claim is that the jury’s verdict was inconsistent, which is

grounds for a new trial rather than judgment as a matter of law. Accordingly, the court will consider

this motion as a motion for a new trial.

II. Inconsistent Jury Verdict

An inconsistent jury verdict is grounds for a new trial. Ward v. City of San Jose, 967 F.2d

280, 286–287 (9th Cir. 1991). A court must attempt to reconcile a jury’s findings, however, before

ordering a new trial. Gallick v. Baltimore & Ohio R.R. Co., 372 U.S. 108, 119 (1963). “Where

there is a view of the case that makes the jury’s answers to special interrogatories consistent, they

must be resolved that way.” Id. (internal quotations omitted).

Defendant asserts that the jury verdict is inconsistent because, based on the wording of the

form, the jury’s answer to Question 1(b) implies that the Assignment was effective, whereas their

answer to Question 2 states that the Assignment was not effective. The jury’s exchange with the

court, however, supports the conclusion that the jury, based on the additional instructions,

clarifications and modifications from the court, understood Question 1(b) to ask whether defendant

had made any inaccurate representations or warranties within 90 days of entering into the

Assignment, regardless of whether the Assignment became effective. This is a “fair reading” of the

answers. Id. Accordingly, the jury verdict is not inconsistent, and a new trial is not warranted on

that basis.1

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III. Affirmative Defenses

Defendant claims that a new trial is warranted because defendant was entitled to raise the

defenses of equitable estoppel, waiver and unclean hands.

A. Equitable Estoppel

On February 23, 2007 the court ruled that the jury should adjudicate the factual questions

underlying defendant’s equitable estoppel defense. At the close of evidence, however, plaintiff

moved pursuant to Federal Rule of Civil Procedure 50(a) for judgment as a matter of law that

defendant’s equitable estoppel defense was unsupported. The court granted plaintiff’s motion. The

court relied in part on a letter from Frank Chiu to Gary Rhea dated September 16, 2002 which stated

that “[p]er our discussion we will exchange Amendment #2 to Lease as soon as we receive

confirmation that the Kaufman Brothers transaction is completed.” This, the court found, precluded

a finding that defendant could have relied upon plaintiff’s promise in the Assignment to sign and

exchange Amendment No. 2. Defendant now asserts that this letter pre-dated the Assignment, and

that defendant was therefore entitled to rely upon the terms of the Assignment rather than the letter. 

Defendant specifically claims that the letter amounts to parol evidence which contradicts the terms

of the written contract, and therefore the court may not consider it.

Defendant’s argument stretches the meaning of the parol evidence rule. The September 16

letter did not alter the terms of the agreement, but rather addressed one element of equitable

estoppel. Namely, reliance. The court relied upon this letter for what it demonstrated about

defendant’s state of mind as to plaintiff’s intentions. The court does not find that this ruling

warrants a new trial.

B. Waiver

During the pre-trial proceedings, the court held that plaintiff was not entitled to pursue its

defense of waiver because the issue of waiver had previously been decided by the court as a matter

of law. In its order on defendant’s motion for summary judgment, the court found, based on the

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record, that “plaintiff has not waived its right to challenge the validity of the Assignment.” 

Sunnyside, 2007 WL 419865 at *11. Defendant challenges this conclusion on the basis that,

because defendant was the moving party, the court was only able to decide issues as a matter of law

in favor of defendant. This is simply not the law. On the contrary, “[i]t is generally recognized that

a court has the power sua sponte to grant summary judgment to a non-movant when there has been a

motion but no cross-motion.” Kassbaum v. Steppenwolf Prods., Inc., 236 F.3d 487, 494 (9th Cir.

2000). Because defendant cites no other basis upon which to challenge the court’s pre-trial ruling

regarding waiver, defendant is not entitled to a new trial on the waiver issue.

C. Unclean Hands

Finally, defendant asserts that the jury should have been instructed on the issue of unclean

hands. Other than a vague reference to “ample evidence” supporting its theory of unclean hands,

defendant proffers no argument whatsoever as to why the court’s prior ruling foreclosing the defense

of unclean hands was improper. Accordingly, defendant is not entitled to a new trial based on the

issue of unclean hands.

CONCLUSION

For the reasons stated above, the court DENIES defendant’s motion for judgment as a matter

of law and for a new trial.

IT IS SO ORDERED.

Dated: August 29, 2007 

MARILYN HALL PATEL

United States District Court Judge

Northern District of California

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1. The parties also raise arguments regarding rescission of the Assignment. Because there has been

no finding of rescission, and because defendant’s motion as to the jury verdict must be denied on

other grounds, the court does not reach these arguments.

ENDNOTES

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