1

Filed 4/20/23 Exteres Corp. v. The Connections Group CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

EXTERES CORPORATION et al.,

Plaintiffs and Respondents.

v.

THE CONNECTIONS GROUP, INC., et 

al.,

Defendants and Appellants,

E078245

(Super.Ct.No. RIC1818410)

OPINION

APPEAL from the Superior Court of Riverside County. Chad W. Firetag, Judge. 

Affirmed.

Reid & Hellyer, Michael G. Kerbs, Jenna L. Acuff, and Douglas A. Plazak for 

Defendants and Appellants.

Wolff Mascaro and Joshua M. Wolff, for Plaintiffs and Respondents.

A business relationship, founded on verbal agreements, collapsed. The parties to 

the agreements, who had intended to generate revenue from the sale of a now-patented 

invention that helps businesses communicate with their customers, disagree whether they 

ever had a final and binding written contract.
2

Following a lawsuit, a jury found for the plaintiffs, a company and its principal, on 

several claims against the defendants, who include the inventors of the technology. After 

adjustments by the trial court, the amended judgment awarded plaintiffs $839,002 in 

compensatory damages and $1,430,000 in punitive damages. Defendants contend that 

the trial court erred in various ways during trial and in ruling on the posttrial motions. 

They request that we reverse the judgment against them and order a new trial or order 

judgment to be entered in their favor. We affirm the judgment.

I. FACTS

Defendant and appellant The Connections Group, Inc. (TCGI) provides

technology that facilitates communication between businesses and their customers via

text messages. TCGI’s principals and sole shareholders are defendants and appellants 

Jay Conrad, Anthony Link, and Mark Sangree.1 Link and Conrad are the technology’s 

inventors, and they now hold a patent on it; their patent application was still pending 

during the events here, but it was approved in March 2021. TCGI had an oral, nonexclusive license from Link and Conrad to use the now-patented technology.

Plaintiff and respondent eXteres Corporation (eXteres) provides “reputation 

management services” for businesses, particularly automotive dealerships. Plaintiff and 

respondent Richard Winch is the principal of eXteres.

1

Conrad, Link, and Sangree were also the principals of Geo Moment, a 

predecessor company to TCGI in the same business, using the same technology; Geo 

Moment was created in January 2016, while TCGI was created in September 2017. 

Except where specified, we use “TCGI” to refer to both companies.
3

In mid-2016, the parties began discussing doing business together. By December 

2016, eXteres was marketing and reselling TCGI’s technology to customers pursuant to 

an oral license for the technology and an oral revenue sharing agreement. Winch also 

understood that, in exchange for his “sweat equity,” he had been granted the position of 

Chief Operating Officer (COO) of TCGI and eXteres would receive stock in TCGI.

While they proceeded with business based on their oral agreements, the parties

engaged in protracted negotiations for a written agreement. Through 2017 and into 2018, 

they exchanged multiple drafts of a “Memorandum of Understanding” (MOU). 

Link sent a revised version of the MOU to Winch by email on May 24, 2018. 

Link had signed the document in his capacity as Chief Executive Officer of TCGI. The 

document had a provision stating that “the MOU has been approved by the TCGI Board 

of Directors with the approval attached.” The attached TCGI “Board Resolution,” 

however, recited that the MOU was adopted at a meeting of the TCGI Board on May 25, 

2018—the day after it was sent to Winch—and the attachment was signed only by Link, 

not by its other two members, Conrad and Sangree. The MOU, like its attachment, was

dated May 25, 2018. Link’s accompanying email stated that the MOU “is set to be dated 

tomorrow so we can get this executed for both sides.” The email noted that Sangree 

“wants to have a final read-through later tonight to make sure there are not any wording 

changes,” explaining that “‘track changes’” had been unintentionally disabled while the 

latest revisions were being made. Link also wrote that “[a]ny final wording changes will 

be known by tomorrow so we can get this executed.”
4

Among other things, the May 24, 2018 version of the MOU stated that it is to be 

considered effective January 1, 2017, regardless of when final signatures are affixed. It

granted eXteres a 10 percent ownership interest in TCGI as of May 25, 2018. It gave

Winch a seat on TCGI’s Board of Directors, effective May 26, 2018, and the position of 

COO on TCGI’s “executive/corporate management team . . . effective January 2017.” It

provided that TCGI grants eXteres “effective January 1, 2017, a General License . . . to 

sell [the technology] to the open business market”, as well as “effective January 1, 2017, 

an Exclusive License” in the automotive industry in the United States and Canada. It

added that Conrad and Link agree in their capacity as inventors that, once the patent on 

the technology issues, they will license to TCGI “the exclusive perpetual use of the 

Patent wherein TCGI will be the majority beneficial owner of the rights to the Patent.” It

also included revenue sharing provisions applicable to eXteres’s use of both the exclusive 

and the general license for the technology in agreements with third parties.

The parties disagree about what happened after Link’s May 24, 2018 email to 

Winch. According to Winch, he waited for any more wording changes, while “pursuing 

opportunities and continuing to execute” on the parties’ oral agreements. Hearing 

nothing, on July 11, 2018, he signed the MOU and emailed it back to Link, believing that 

they had completed a final written agreement. The document Winch sent back to Link 

included the MOU with his signature added, but not the Board Resolution. 

According to Link, on May 25, 2018, Winch called him and expressed that he 

disagreed with some changes in the latest draft MOU. Link told Winch that Conrad and 
5

Sangree would not agree to the MOU without those changes, and indeed they had 

requested additional changes before final approval. The conversation was contentious

and did not result in a meeting of the minds; Link testified that Winch “was yelling and 

screaming and cussing at me, and then he, basically, hung up.” In an email sent on May 

26, 2018, Link acknowledged Winch’s “desire to remove” a particular provision of the 

May 24th, 2018 draft of the MOU. Nevertheless, Link wrote, “this clause has to be part 

of the MOU for [Sangree] and [Conrad] to sign the Board minute[s],” and “[Sangree] is 

still reviewing the MOU and will probably have additional changes.” At trial, Link

testified that he was “completely shocked” to receive Winch’s July 11, 2018 email, 

returning the MOU signed and without any changes, given their previous conversation

and having heard nothing more in the interim. He was also “taken aback” that Winch 

was “trying to remove the [Board Resolution] page and pass this off as a valid contract.”

On July 16, 2018, the TCGI board of directors (that is, Link, Conrad, and Sangree) 

met and voted not to approve the MOU. On July 19, 2018, TCGI’s counsel sent Winch 

and eXteres a letter notifying them “that a majority of the Board of Directors voted 

against approval of the MOU and its contemplated future agreements.” The letter 

requested that Winch “cease and desist from identifying [himself] as either an officer, 

shareholder, or board member” of TCGI. It also requested that he “refrain from any 

further contact with entities engaged in existing business relationships with TCGI.” 

Nevertheless, the letter expressed that TCGI was “open to discussions in regard to 

engaging [eXteres] through a reseller arrangement,” particularly as to one specific 
6

company, with which eXteres had a longstanding business relationship. The letter also 

stated “[a]ny existing revenue sharing contracts” between eXteres and TCGI “would be 

honored by TCGI.”

Winch and eXteres filed their complaint in this lawsuit in September 2018. The 

operative first amended complaint asserted seven causes of action: (1) declaratory relief; 

(2) breach of contract; (3) breach of fiduciary duty; (4) tortious interference with 

contract; (5) intentional interference with prospective economic relations; (6) intentional 

misrepresentation; and (7) negligent misrepresentation.

The jury’s findings on the contract and tort causes of action, expressed on a 

detailed special verdict form, largely favored plaintiffs. The jury found the defendants 

liable on each cause of action except intentional interference with prospective economic 

relations. The jury was instructed to determine damages for each cause of action 

separately, without considering whether they were duplicative. Thus, the jury awarded 

these compensatory damages: (1) for breach of contract, $678,049; (2) for breach of 

fiduciary duty, $839,002; (3) for tortious interference with contract, $745,875; (4) for 

intentional misrepresentation, $148,371; and (5) for negligent misrepresentation, 

$148,371. In the judgment, to “avoid duplicative damages,” the trial court limited the 

plaintiffs’ “compensatory recovery . . . to $839,002, jointly and severally, against (a) 

[TCGI, Link, Sangree, and Conrad] for $745,875 and (b) [Link, Sangree, and Conrad] for 

$93,127.” The amount of $839,002 is, to the dollar, the amount plaintiffs’ expert Eric 
7

Lane calculated to be the value of a 10 percent interest in TCGI, based on the value of 

forecasted royalties from Link and Conrad’s patent, adjusted to present value.

Along with compensatory damages, the jury also decided punitive damages were 

appropriate: (1) against TCGI, $22,301,617; (2) against Link, $38,734,388; (3) against 

Sangree, $17,606,540; and (4) against Conrad, $38,734,388. This punitive damages 

award totaled $117,376,933, which, to the dollar, is the amount Lane described as the

patent’s “Forecasted Royalty Collections over 15 years.” In testimony, Lane explained

that this amount represents the “sum of the [projected] royalty collections” from Link and 

Conrad’s patent without any “discount” for risk or adjustment to present value, as 

forecasted by another expert for plaintiffs, Don Feuer. In the initial judgment, however, 

the trial court “[b]y stipulation of Plaintiffs and order of the Court” awarded reduced 

punitive damages as follows: (1) against TCGI, $400,000; (2) against Link, $1,500,000; 

(3) against Sangree, $325,000; and (4) against Conrad, $1,500,000.

Defendants brought posttrial motions for new trial and judgment notwithstanding 

the verdict. The trial court granted in part and denied in part the motions. It found 

insufficient evidence that Conrad or Sangree had made any misrepresentations to Winch 

or eXteres, and therefore granted judgment notwithstanding the verdict in their favor as to 

those causes of action and struck the corresponding damages awards. Based on evidence 

of the individual defendants’ net worth, and with the consent of plaintiffs, the trial court 

ordered their punitive damages further reduced, to $450,000 each for Link and Conrad 
8

and $130,000 for Sangree. The trial court denied the motions in all other respects. An 

amended judgment was entered accordingly.

II. DISCUSSION

A. Excessive damages

Defendants contend that rather than reduce the jury’s excessive award of damages, 

the trial court should have instead ordered a new trial. In their view, the damages award

was so excessive it must have been the product of passion or prejudice that infected not 

only the jury’s decisions about that award, but also liability. We are not persuaded.2

Generally, rulings on new trial motions are reviewed for abuse of discretion. 

(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 859.) Nevertheless, “any 

determination underlying any order is scrutinized under the test appropriate to such 

determination.” (Ibid.) Here, the trial court denied defendants’ motion for new trial, but 

only after reducing the punitive damages award with plaintiffs’ consent. That reduction 

was an exercise of the court’s discretion under Code of Civil Procedure section 662.5, 

which provides that a court that would otherwise grant a new trial due to excessive 

damages may instead “make its order subject to the condition that the motion is denied if 

2

On the other hand, we find unpersuasive plaintiffs’ contention that defendants 

forfeited the argument that the damage award was excessive by failing to raise it in the 

trial court. In requesting a new trial, defendants argued that “the jury’s verdict with 

respect to all of Plaintiffs’ claims was tainted by passion and prejudice . . . .” The trial 

court denied defendants a new trial on that basis (or any other), and instead reduced the 

jury’s damages award. It is appropriate for defendants to now argue that decision was in 

error. Certainly, defendants’ arguments on appeal are framed somewhat differently than 

their trial court arguments. But that is not enough for us to refuse to consider their 

arguments on the merits, whether as a matter of law or in our discretion.
9

the plaintiff consents to a reduction of the award to an amount that the court 

independently determines to be fair and reasonable.” (Bullock v. Philip Morris USA, Inc.

(2008) 159 Cal.App.4th 655, 688 (Bullock); see Code Civ. Proc., § 662.5, subd. (a)(2).) 

“A court exercising this authority acts as an independent trier of fact.” (Bullock, supra, 

159 Cal.App.4th at p. 688; see Collins v. Union Pacific Railroad Co. (2012) 207 

Cal.App.4th 867, 882-883 [trial court sits as 13th juror in determining whether damage 

award was excessive].) “We must affirm the court’s decision if the court states adequate 

reasons for the decision and substantial evidence supports the decision.” (Bullock, at pp. 

688-689; see Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405, 412; Neal v. Farmers 

Ins. Exchange (1978) 21 Cal.3d 910, 931-933, & fn. 18 (Neal).)

Importantly, “when a trial court grants a new trial on the issue of excessive 

damages, whether or not such order is conditioned by a demand for reduction, the 

presumption of correctness normally accorded on appeal to the jury’s verdict is replaced 

by a presumption in favor of the order.” (Neal, supra, 22 Cal.4th at p. 932.) 

“Accordingly, the relevant amount for purposes of our review is not the amount awarded 

by the jury, but the reduced amount ordered by remittitur.” (Bullock, supra, 159 

Cal.App.4th at p. 689.) Thus, defendants’ focus here on the excessiveness of the jury’s 

damages awards before reduction is mistaken.

Defendants have not attempted to articulate any reason why even the reduced

punitive damages awarded by the trial court might still be excessive. Although the jury 

was prepared to award more, plaintiffs only ever sought $400,000 in punitive damages 
10

against TCGI, and defendants never challenged that amount as excessive in the trial 

court, let alone on appeal. In the trial court, defendants persuaded the trial court and 

plaintiffs that $450,000 was the “absolute most that could be applicable for punitive 

damages for Link and Conrad,” based on the present value of the patent. Defendants

have not argued that the trial court’s finding that Sangree’s approximate net worth was 

$1.3 million lacks the support of substantial evidence, or that a punitive damages award 

of 10 percent of that amount ($130,000) is excessive.

As to compensatory damages, defendants contend the amounts awarded 

“demonstrate that the jury . . . merely adopted wholesale” the testimony of plaintiffs’ 

experts. It is not apparent, however, why this alone might tend to show the award to be 

excessive, or show that the jury “lost sight of the law and the facts” in deciding liability, 

as well as damages, as defendants assert. On the contrary, it shows the jury grounded its 

compensatory damages awards in the evidence presented to it. A jury may give an 

expert’s opinion “the weight which it finds that opinion deserves.” (Howard v. Owens 

Corning (1999) 72 Cal.App.4th 621, 633.) Defendants’ fundamental point here is not 

that the jury came up with a compensatory damages award that was pure “surmise and 

conjecture” in the sense of lacking any support in the record, but that the experts’ 

opinions were so flawed that the trial court should have excluded them from evidence. If 

this were so, however, the jury’s adoption of the experts’ opinions would tend to show 

prejudice from evidentiary error, not that the jury was carried away by passion or 
11

prejudice. The merits of defendants’ claims of evidentiary error are separate questions, 

which we address below.

Defendants’ reliance on the dissent in Sabella v. Southern Pac. Co. (1969) 70 

Cal.2d 311, 321-326 (J. Traynor, dissenting) (Sabella) is misplaced. Defendants quote 

the Sabella dissent for the proposition that “[w]hen appeals to passion and prejudice may 

have influenced a verdict, they may have influenced it on the issue of liability as well as 

on the issue of damages.” (Id. at p. 326.) In Sabella, however, the plaintiff’s counsel had 

employed several blatantly improper arguments to appeal to passion and prejudice. (Id.

at p. 325.) Defendants have not argued that plaintiffs’ counsel here engaged in any 

similar misconduct that might have deprived defendants of “the right to an impartial trier 

of fact and the correlative right to a trial free of appeals to passion and prejudice.” (Id. at 

p. 326.) The quoted language, even if a correct statement of the law where applicable, 

does not help defendants here.

We conclude that defendants have not shown that the trial court abused its 

discretion under Code of Civil Procedure section 662.5, subdivision (a)(2), to reduce the 

jury’s excessive award of damages rather than order a new trial.

B. Admission of Expert Testimony

Defendants contend that the trial court erred by admitting “unreasoned, unreliable, 

and speculative expert testimony” by plaintiffs’ experts Don Feuer and Eric Lane

regarding several categories of damages. (Bolding and capitalization omitted.) We find 
12

no abuse of discretion in the trial court’s decision to admit the testimony and allow the 

jury to decide what weight the testimony deserved.

1. Additional background

At trial, the defense presented no expert testimony about the value of Link and 

Conrad’s patent. In contrast, Feuer testified as an expert for plaintiffs “to evaluate the 

technology in question and to place a value” on it. He described his background in the 

telecommunications industry, which included experience as an inventor and “build[ing] 

technology companies.” He had experience in bringing new technologies to market. He 

had previously run “an SMS texting company.” He was CEO of a “patent-holding 

company,” to which he had assigned his own patents, and which “is involved in litigating 

against other telecommunications companies.”

Feuer stated that he is “not a professional patent evaluator,” but that he is “an 

expert in terms of what patents are viable and which are not.” Feuer viewed Link and 

Conrad’s patent as a “valuable thing” and a “big deal.” Based on his research, he

believed that their then-pending patent application had priority over potential

competitors. As to value, Feuer described the considerations he believed a non-practicing 

entity would use in deciding on a purchase price for the patent, if it were to be sold. He 

estimated a 15-year commercial lifespan for the technology.3 He testified as to the size of 

the mobile advertising market, in which the technology would be used, as well as

3

Feuer opined that, although a patent like Link and Conrad’s protects their 

invention for 20 years, it does not make sense to project profits that far into the future, 

because “[y]ou don’t know if there will be some disruptive technology that comes out.”
13

projections for that industry’s growth. He forecasted the “utilization rate” that he 

expected for the patent over time, representing the patented technology’s penetration into 

the mobile advertising market as the “minor fraction” of the total mobile advertising 

market that would be dedicated to royalties for using the patented technology. His

forecast of the royalty potential of the patent separated out expected royalties from 

licensing and litigation settlements from royalties recovered through judgments after trial,

to account for the extra expense of litigation.

During Feuer’s testimony, on cross examination, he estimated that if Link and 

Conrad were to sell their patent, “it would probably sell for 5, $10 million today.” Feuer, 

however, provided his “data” to Lane, a certified public accountant and business 

appraiser who also testified as an expert witness for plaintiffs. Lane used the numbers 

Feuer provided to calculate a more precise value than Feuer’s view of the sale price. 

Lane took the total potential royalties forecasted by Feuer and discounted them to present 

value using a “reasonable discount rate that a private investor would expect investing in 

some kind of new technology.” Lane determined the “Present Value Discounted Royalty 

Collections” of the patent to be $8,390,017, an amount he described as the “forecasted 

revenue stream” for the patent, discounted to present value. From that, he calculated a 10

percent interest to be $839,002, which is the amount the jury awarded to plaintiffs on the 

breach of fiduciary duty claim.

Lane’s opinions also included a “forecast” of the profits that eXteres would have 

received from certain contracts with third parties if defendants had not tortiously 
14

interfered. Lane calculated projected revenue and expenses for six years, from July 2018 

through June 2024. He testified that he chose that length of time based on discussions 

with Winch: “We didn’t want to reach too far out in the future, but six years is a decent 

mid-term event where [Winch] felt he could reasonably forecast the minimum revenue 

that he could have achieved.” Lane’s opinions about the likely growth rate of revenue 

from the contracts, as well as eXteres’s expenses, were also calculated from information 

he received from Winch. Lane concluded that eXteres’s lost profits over the six-year 

period, with future profits adjusted to present value, amounted to $3,231,238. The jury 

awarded plaintiffs a lesser amount on the tortious interference claim, allocating $740,875 

to one contract and $5,000 to another (roughly a quarter of the amounts suggested by 

Lane’s calculations), and finding no liability or damages for two other contracts.

Lane also calculated the value of plaintiffs’ time and money spent during 

eXteres’s relationship with TCGI during the period from June 2016 through July 2018, 

which they sought as pre-contract damages on their breach of contract claim. Again, his 

calculations started from information provided by Winch. Winch reviewed his records to 

create a “chronological time line” of meetings, travel, and other activities he personally 

engaged in as part of the “TCGI project,” and had his office “match up” those activities 

with receipts for expenses associated with those activities. Winch also estimated the

percentage of time that he and various eXteres employees spent each month on the 

project. From Winch’s itemized chronology, Lane calculated the total time that either 

Winch or other eXteres staff spent, using task-specific “assumptions” based on his 
15

“business experience” of how much time should be allocated to, for example, a text, or an 

email, or a business meeting. To that total amount of time, he applied a “blended” hourly 

rate derived from an industry survey, and he added travel expenses to determine a “Total 

Reimbursement” figure. For comparison, Lane also made calculations starting from

Winch’s estimates of percentages of time he and eXteres staff had spent monthly, 

resulting in an alternative amount. The jury apparently adopted the calculations starting 

from Winch’s itemized chronology as the basis for its award of damages for breach of 

contract.

4

2. Applicable Law

The trial court has a “substantial ‘gatekeeping’ responsibility” to ensure that an 

expert’s opinion is based on both reliable material and sound reasoning. (Sargon 

Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 769 

(Sargon).) The court “may inquire into, not only the type of material on which an expert 

relies, but also whether that material actually supports the expert’s reasoning.” (Id. at p. 

771; Evid. Code, §§ 801 [governing judicial review of the subject of expert testimony and 

type of matter the expert relied on in “forming an opinion”], 802 [governing judicial 

review of the “reasons” for expert’s opinion].) “The court must not weigh an opinion’s 

4

As noted, the jury awarded plaintiffs $678,049 on the breach of contract claim. 

To the dollar, that is the amount Lane calculated starting from Winch’s itemized 

chronology to be the appropriate “Total Reimbursement” amount ($491,621) plus pretrial interest. The analogous amount that Lane calculated for comparison, based on 

Winch’s estimates of percentages of time spent, was $593,484 ($437,716 plus interest). 

Winch’s own, lay opinion was that the appropriate “aggregate number” was “$700,000 to 

$800,000.”
16

probative value or substitute its own opinion for the expert opinion. Rather, the court 

must simply determine whether the matter relied on can provide a reasonable basis for the 

opinion or whether that opinion is based on a leap of logic or conjecture.” (Sargon, 

supra, at p. 772.)

“‘The trial court must exclude expert opinion testimony ‘that is (1) based on 

matter of a type on which an expert may not reasonably rely, (2) based on reasons 

unsupported by the material on which the expert relies, or (3) speculative.’” (HewlettPackard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 571, quoting Sargon, supra, 55 

Cal.4th at pp. 771-772.) Nevertheless, some areas that are properly the subject of expert 

opinion, such as lost profits, are “always speculative to some degree.” (Sargon, at p. 

775.) “Courts must not be too quick to exclude expert evidence as speculative [. . . .] A 

reasonable certainty only is required, not absolute certainty.” (Ibid.)

The trial court’s discretion to exclude or admit expert testimony under Evidence 

Code sections 801 and 802 is broad. We may overturn the court’s decision only if we 

conclude it was arbitrary or irrational. (Sargon, supra, 55 Cal.4th at p. 773.)

3. Analysis

a. Patent valuation

We do not find the trial court’s decision to admit Feuer’s testimony about the 

value of Link and Conrad’s patent arbitrary or irrational. Feuer’s experience in the 

industry, both as an inventor of patents and an entrepreneur running businesses built 

around patented technology, and including both practicing and non-practicing entities, is 
17

substantial. He testified that the factors he considered in making his forecasts about

future royalties were those a potential purchaser of the patent would consider in 

determining a reasonable purchase price if the patent were to come up for sale. On its 

face, there is nothing unreasonable about valuing a patent (and by extension a business 

built around that patent) by such a measure. 

Defendants criticize some of the numbers that Feuer used as speculative or without 

foundation. While this criticism certainly supports a basis for vigorous crossexamination of Feuer as to how much leeway his numbers permit, we do not find Feuer’s

testimony so speculative as to have compelled the trial court to exclude it.5 The patent 

had some value, and Feuer provided reasoning with an adequate foundation to establish 

with a reasonable degree of certainty what that value is. For example, Feuer’s projections 

about the growth of the mobile advertising market were based on “analyst reports,” one 

of which he identified by author. That is the sort of published information experts 

routinely rely on in developing their opinions. (See Maatuk v. Guttman (2009) 173 

Cal.App.4th 1191, 1198 (Maatuk) [“an expert may rely on any information of the type 

reasonably relied on by an expert, even if it is hearsay, and from a nonexpert”]; Evid. 

Code, § 801, subd. (b).) Any lack of specificity regarding Feuer’s sources “simply 

affected the testimony’s weight and could have been probed in cross-examination at 

trial.” (People ex rel. Dept. of Transp. v. Clauser/Wells Partnership (2002) 95 

5 We are not addressing here whether the trial court could have exercised its 

discretion to exclude Feuer’s testimony as too speculative or lacking in foundation.
18

Cal.App.4th 1066, 1086.) Similarly, Feuer’s forecast of the fraction of that market that 

Link and Conrad’s patented technology would capture as royalties was based on his 

“experience” in the relevant market. (Cf. Maatuk, supra, 173 Cal.App.4th at p. 1198 

[excluding expert’s assumptions about market penetration in part because she “did not 

testify to any expertise on the market”].) Defendants criticize Feuer for ignoring 

available “historical data” of “actual revenues” showing royalties the patent had 

generated to date, and a lack of other specific sources. Feuer’s experience, however, 

included close attention to how patents he viewed as analogous have tended to perform 

over time, informing how he expected Link and Conrad’s patent would do. Comparison

with arguably analogous patents is different from pure speculation. Feuer’s expressed 

reasoning for how profitable he expected patent enforcement efforts would have been is 

hardly unassailable. Nevertheless, he runs a patent holding company, which generates

revenue from such efforts, so the issue is squarely within his area of expertise. 

Defendants were, of course, free to present evidence showing Feuer’s reasoning to 

be wrong and to point out to the jury any arguable holes in his reasoning through crossexamination and argument. That Feuer’s testimony might be susceptible, at least in some 

respects, to such challenges does not demonstrate that the trial court was compelled to 

exclude the testimony altogether. (See Ventura County Flood Control Dist. v. Security 

First Nat. Bank (1971) 15 Cal.App.3d 996, 1004 [“Where it appears that the opinion of a 

valuation witness is based upon considerations which are proper as well as those which 

are not, the testimony may be admitted and the trier of fact shall determine its weight and 
19

credibility”].) Defendants could argue to the jury, for example, that Feuer’s testimony 

could reliably establish only a lesser amount of damages than what he asserted, or even 

that the jury should give the testimony no weight at all.

Defendants criticize Feuer’s method of valuing the patent on the ground that he 

did not apply the so-called “Georgia-Pacific factors,” which are often used in federal 

courts to determine statutory damages for patent infringement. (See Uniloc USA Inc. v. 

Microsoft Corp (Fed. Cir. 2011) 632 F.3d 1292, 1317-1318 (Uniloc) [Federal Circuit has

“sanctioned the use of the Georgia-Pacific factors” in determining statutory patent 

infringement damages]; Georgia-Pacific Corp. v. U.S. Plywood Corp. (S.D.N.Y. 1970) 

318 F.Supp. 1116, 1120 (Georgia-Pacific).) This case, however, is not governed by 

federal law about statutory damages for patent infringement. Defendants cite no 

California authority requiring an expert to use the Georgia-Pacific factors in 

circumstances like this case, and we are aware of none. And for good reason; the 

Georgia-Pacific factors are evidentiary facts relevant to determining how a hypothetical 

negotiation of a “reasonable royalty” would have turned out, had the parties engaged in 

such a negotiation. (35 U.S.C. § 284; Uniloc, supra, 632 F.3d at p. 1317; GeorgiaPacific, supra, 318 F.Supp. at p. 1120.) It is not at all apparent that a patent must be 

valued only by that measure in contexts other than determining statutory damages for 

patent infringement under federal law. Indeed, even in the context of a federal patent 

infringement matter, “there are ways of determining a reasonable royalty other than 

through the Georgia-Pacific factors.” (Exmark Manufacturing Co. Inc. v. Briggs & 
20

Stratton Power Products Grp., LLC (Fed. Cir. 2018) 879 F.3d 1332 (Exmark).) 

Certainly, defendants could have presented expert testimony of their own, contesting 

Feuer’s methodology. Such evidence, however, would have raised only a factual 

question for the jury regarding what methodology was more appropriate.6 (See People ex 

rel. Dept. of Transp. v. Clauser/Wells Partnership, supra, 95 Cal.App.4th at p. 1083 [in 

eminent domain action, “whether the specific circumstances of [defendants’] business 

warranted application of [expert appraiser’s] methodology [for valuing the business] was 

a factual question for the jury. However, although any ‘just and equitable’ method could 

be proper, the jury would remain ‘free to accept or reject’ [the expert’s] valuation”].)

The Federal Circuit’s reasoning in Exmark, supra, 879 F.3d 1332, emphasized by 

defendants, does not persuade us that the trial court was compelled to exclude Feuer’s 

testimony. In Exmark, a federal patent infringement matter, the plaintiff’s expert opined

that the appropriate hypothetical royalty rate to use in calculating damages was 5 percent. 

(Id. at p. 1349.) The expert recited the Georgia-Pacific factors and discussed them in a 

superficial manner. (Exmark, at pp. 1350-1351.) The expert’s opinion was, however, 

“devoid of any analysis tying either the evidence or the specific Georgia-Pacific factors 

to the proposed 5 percent royalty rate.” (Id. at p. 1351.) Among other things, the 

6 We note also that Feuer’s testimony just is the opinion testimony of a qualified 

expert, which is one of the 15 Georgia-Pacific factors. (Georgia-Pacific, supra, 318 

F.Supp. at p. 1120.) We infer that the Georgia-Pacific factors are useful for evaluating a 

party’s evidence of damages for patent infringement as a whole, but they do not 

necessarily speak to the admissibility of any particular expert’s opinion, particularly 

outside the context of a patent infringement action.
21

evidence that the expert failed to analyze included a comparable, but non-hypothetical,

settlement agreement, the parties to which had agreed to a royalty rate of 3.64 percent. 

(Id. at p. 1349) The Federal Circuit concluded that the expert’s opinion, based on a 5

percent royalty rate “plucked . . . out of nowhere,” should have been excluded from 

evidence because it “lacked sufficient ties to the facts of the case.” (Id. at p. 1351.) In 

contrast, as discussed, Feuer’s opinions, while debatable, were not plucked from 

nowhere, but derived from his experience with other patents he viewed as comparable. 

There were ample grounds for defendants to dispute the strength of that foundation

supporting Feuer’s conclusions. But we do not find it irrational or arbitrary for the trial 

court to have allowed the jury to make the determination of how much weight Feuer’s 

testimony deserved in determining the value of the patent.

Defendants further contend that Lane’s testimony about the patent’s value should 

have been excluded “for the same reasons [Feuer’s] testimony should have been 

excluded.” Because we are not persuaded by defendants’ arguments as to Feuer, we 

reach the same conclusion as to Lane. Defendants have not demonstrated that the trial 

court abused its discretion by admitting the testimony of either Feuer or Lane as to the 

valuation of Link and Conrad’s patent.

b. Lost profits

Defendants contend that Lane’s forecast of eXteres’s lost profits resulting from

defendants’ tortious interference with contract should have been excluded from evidence 
22

as speculative and “unhelpful to the jury.” We find no abuse of discretion in the trial 

court’s decision to allow the jury to decide what weight to give the testimony.

As defendants emphasize, Lane’s forecast of lost profits does not rest on available 

data regarding actual revenues from the contracts at issue, either during the period from 

2016 to 2018 when eXteres acted as a middleman between TCGI and customers, or the 

period from 2019 to 2021 when TCGI was dealing with the customers directly. It is not 

apparent, however, why actual revenues are the only reasonable basis for determining 

what would have happened in a hypothetical situation, that is, what the revenue would 

have been absent TCGI’s tortious interference. The point of the business relationship 

between TCGI and eXteres was to try to achieve greater profits than TCGI would be able 

manage on its own by leveraging eXteres’s experience and expertise, including its 

preexisting client relationships.7 Arguably, the difference between actual and 

hypothetical revenues is not a sign of any flaw in Lane’s forecasts, but a measure of the 

value of eXteres’s efforts to market the technology.

Similarly, defendants emphasize that Lane’s lost profits forecasts derived from 

information he received from Winch, rather than independently gathered or verified data. 

It is not apparent, however, why that alone might render Lane’s calculations so unreliable 

as to be “entirely speculative,” as defendants propose. Winch had personal knowledge of 

the contracts and client relationships at issue, and thus some foundation to describe them 

7

For example, the bulk of damages awarded for tortious interference related to a 

contract with a company that already had a decade-long business relationship with 

eXteres before signing on to use TCGI’s technology.
23

with reliability to Lane including, at least arguably, projections of how things would 

likely have developed without defendants’ interference. Certainly, Winch’s information 

was subject to challenge, for example, as biased or excessively optimistic. But Winch 

was available for cross-examination on these or other purported defects, and the 

reasonableness of Winch’s information, on which Lane relied, is a question of fact. (See, 

e.g., Sargon, supra, 55 Cal.4th at p. 774 [“‘[A]lthough generally objectionable for the 

reason that their estimation is conjectural and speculative, anticipated profits dependent 

upon future events are allowed where their nature and occurrence can be shown by 

evidence of reasonable reliability’”].) It was within the bounds of the trial court’s 

discretion to leave it to the jury to decide how much weight Lane’s opinions should be 

given based on any deficiencies in the information underlying them.

Defendants’ arguments in favor of a different conclusion based on Sargon, supra, 

55 Cal.4th 747, are not persuasive. In Sargon, our Supreme Court upheld a trial court’s 

exercise of discretion in its role as “gatekeeper” to “exclude speculative expert 

testimony.” (Id. at p. 781.) We face a different question, whether the expert’s opinions 

were so unreasonable that the trial court was required to exclude them. Thus, deference 

to the trial court’s discretion requires we view Lane’s testimony generously, whereas 

Sargon’s circumstances required the opposite perspective. 

Furthermore, the expert testimony excluded in Sargon differed from Lane’s 

testimony in that it was unreliable and poorly reasoned. In Sargon, the expert purported 

to compute lost profits via a market share approach, comparing the plaintiff company to 
24

six large, multinational companies that were the dominant market leaders in the relevant 

industry for dental implants. (Sargon, supra, 55 Cal.4th at p. 756.) The expert, who was 

a certified public accountant and attorney, testified that if there had been no breach of 

contract by the defendant, the plaintiff would have grown from a three-person operation

with no market share to one of the industry leaders, in part by investing in research and 

development on new products not yet invented. (Id. at pp. 755, 765-766.) This testimony

was grounded solely in the expert’s “belief,” unsupported by evidentiary facts or relevant 

expertise, that the plaintiff was “innovative, and that innovation was the prime market 

driver.” (Id. at p. 777.) The expert offered no rational basis to conclude that the plaintiff 

would become a market leader, let alone any rational basis for the jury to decide whether 

that would mean, say, a 4 percent share or a 20 percent share of the market. (Id. at pp. 

777-778.) The Supreme Court agreed with the trial court’s decision to exclude such 

“‘faith-based’” predictions. (Id. at pp. 766 [quote], 781.) Winch’s predictions about lost 

profits, in contrast, were founded on more measured reasoning, based not only in 

knowledge of the technology and the industry, but the specific contracts and client 

relationships that defendants were alleged to have disrupted. While his predictions about 

what would have happened without the interference are not unassailable, they are not 

nearly so speculative as that of the expert in Sargon.

Defendants have demonstrated no abuse of discretion in the trial court’s decision 

to admit Lane’s testimony about lost profits.
25

c. Pre-contract damages

Defendants contend that Lane’s calculations relating to eXteres’s pre-contract 

damages arising from time and money spent in the period from June 2016 through July 

2018, before the MOU, should have been excluded because the testimony “added nothing 

but improper unfounded emphasis to Winch’s testimony.” This argument does not merit 

extended discussion. It is implausible, to say the least, that ordinary jurors are as capable 

as a certified public accountant to take raw data of itemized receipts and time records and 

calculate an appropriate dollar amount to represent total expenses. (Cf. Summers v. A. L. 

Gilbert Co. (1999) 69 Cal.App.4th 1155, 1169 [proper to exclude expert testimony when 

“‘“‘the subject of inquiry is one of such common knowledge that men of ordinary 

education could reach a conclusion as intelligently as the witness’”’”].) Moreover, even 

if some jurors might be able to manage the task, it is reasonable to conclude that it would 

still be helpful to have an expert perform the calculations. (See ibid. [“‘“expert opinion 

may be admitted whenever it would ‘assist’ the jury”’”].) 

Similarly, defendants are correct that “the proper role of expert testimony is to 

help the jury understand the significance of case-specific facts proven by competent 

evidence, not to place before the jury otherwise unsubstantiated assertions of fact.” 

(People v. Valencia (2021) 11 Cal.5th 818, 837.) It is not apparent, however, why this 

principle should bar Lane’s testimony. Lane did not serve as a proxy to smuggle in

evidence of case-specific facts from an absent witness. (Cf. id. at p. 839-840 [gang 

expert’s recitation of facts of predicate offenses of which he had no personal 
26

knowledge].) He did not rely on the opinion of another, absent expert in an 

“uninformed” manner and in the absence of any basis in the record that would justify 

such reliance. (Cf. San Francisco Print Media Co. v. The Hearst Corp. (2020) 44 

Cal.App.5th 952, 963.) Rather, he took raw data showing hours spent and expenses 

incurred and performed his own analysis, relying on his own expertise, to produce a 

dollar amount representing the total cost of the activities. Defendants have not shown

that Lane’s testimony fell outside the proper role of expert testimony.

C. Time and cost damages

The only damage award that plaintiffs sought on their contract claim was recovery 

for their pre-contract expenses; Lane presented the jury with two alternative calculations 

of such expenses, and the jury chose one of them as the amount of the contract damages.

Under the judgment proposed by plaintiffs and adopted by the trial court, as well as the 

later amended judgment, this amount was awarded only in the alternative to other forms 

of damages arising from other causes of action, such as the lost profits sought for 

interference with contract. Defendants argue that these “time and costs damages” for 

breach of the MOU were “unrecoverable” because those expenses would have been 

incurred under the parties’ oral agreements. Plaintiffs contend this argument was 

forfeited by failing to raise it in the trial court, and that it is in any case without merit. 

We do not find the argument forfeited.

8

 We do find it unpersuasive.

8

In defendants’ new trial motion, they argued that the time and cost expenses did 

not amount to an “actual loss” caused by breach of contract, but rather were “in service 

of” contracts with clients obtained under the parties’ oral agreements or in “an attempt to 

[footnote continued on next page]
27

“One proper ‘measure of damages for breach of contract is the amount expended 

[by the nonbreaching party] on the faith of the contract.’” (Agam v. Gavra (2015) 236 

Cal.App.4th 91, 105 (Agam); see also 1 Witkin, Summary of Cal. Law (10th ed. 2005) 

Contracts, § 883, p. 970 [one measure of contract damages “is the amount of the 

plaintiff’s expenditures, together with the reasonable value of his or her own services, in 

preparation and performance in reliance on the contract”].) Initially, “the burden is on 

the plaintiff to establish ‘the amount which he has been induced to expend.’” (Agam, 

supra, 236 Cal.App.4th at p. 106.) “The burden then shifts to the defendant to show the 

nonbreaching party’s expenses were unnecessary, such that his or her recovery of 

reliance damages should be reduced.” (Ibid.) The recovery may also be reduced if the 

defendant can show plaintiffs “would have suffered a loss even if the defendant had fully 

performed.” (Ibid.) There is a “rebuttable presumption,” however, “‘that complete 

performance of the agreement would . . . have resulted in at least reimbursing the injured 

party for his outlay fairly made in performance of it.’” (Id. at p. 107)

Defendants have not attempted to show that plaintiffs’ expenditures of time and 

money were unnecessary. In other contexts, as discussed, defendants have disputed 

plaintiffs’ projections of how much revenue would have been generated if the parties’ 

business relationship had continued. Defendants have not, however, specifically argued 

that revenues would have been inadequate even to reimburse plaintiffs for their claimed 

expenditures.

obtain” such contracts, “of which Plaintiffs received 50 percent of the net proceeds.” 

This is fundamentally the same argument as the one defendants have raised on appeal.
28

Instead, defendants argue that plaintiffs’ expenditures should not be viewed as 

initial outlays relying on the expected MOU, but rather as being in service of entirely 

separate contracts—the parties’ oral agreements. Defendants have not articulated, 

however, why the jury (and, on the new trial motion, the trial court) might have been 

required to accept that framing of the issue. There is evidence supporting the different 

conclusion that the parties’ oral agreements—though also valid and enforceable as

contracts in their own right—were precursors, organizing the parties’ initial dealings 

during a preparatory phase, but not independent of the MOU. Among other things, 

Winch’s testimony supports that view of what occurred. He stated that “ultimately we 

intended for there to be a final agreement at some point in the future that would 

memorialize the entire span of time that our oral agreement and these drafts were taking 

place . . . We just didn’t know at that moment in time when that would take place.” The 

terms of the MOU itself—including its backdated effective date of January 1, 2017, and 

incorporation of many terms from the parties’ oral agreements that were effective during

the same period—support the same conclusion.

Defendants emphasize that the jury was instructed using CACI No. 1923 that 

plaintiffs may recover amounts “spent in reliance on Appellants’ misrepresentations” 

only “‘if those amounts would not otherwise have been spent.’” This argument, however, 

muddles together two different types of reliance damages. CACI No. 1923 relates to 

damages arising from reliance on tortious misrepresentations. The pre-contract expenses 

here flow not from any misrepresentations, but from the defendants’ breach of a contract
29

(the MOU), representing plaintiffs’ expenditures in preparation for that contract. The 

jury was properly instructed on the law relating to that sort of reliance damages using 

CACI No. 361. The question in the contract context is not whether the “amounts would 

not otherwise have been spent” (CACI No. 1923), but whether eXteres “would have 

suffered a loss” even if TCGI had “fully performed its obligations under the contract” 

(CACI No. 361). Those different questions lead to different answers, as reflected here in 

the jury’s awards of compensatory damages for breach of contract ($678,049) and 

tortious misrepresentation ($148,371).

We conclude that defendants have not shown any appropriate basis for us to 

disturb the jury’s award of contract damages.

D. Inconsistent jury findings

Defendants argue that the jury’s finding of liability on the breach of contract cause 

of action contradicts its findings of liability on the intentional and negligent 

misrepresentation causes of action. It does not.

In civil cases, “a fact finder may not make inconsistent factual determinations 

based on the same evidence.”9 (Oxford v. Foster Wheeler LLC (2009) 177 Cal.App.4th 

700, 707].) “On appeal, we review a special verdict de novo to determine whether its 

findings are inconsistent.” (Singh v. Southland Stone, U.S.A., Inc. (2010) 186 

9

The rule is different in criminal cases, where “[t]he law generally accepts 

inconsistent verdicts as an occasionally inevitable, if not entirely satisfying, consequence 

of a criminal justice system that gives defendants the benefit of a reasonable doubt as to 

guilt and juries the power to acquit whatever the evidence.” (People v. Palmer (2001) 24 

Cal.4th 856, 860.)
30

Cal.App.4th 338, 358.) “A special verdict is inconsistent if there is no possibility of 

reconciling its findings with each other.” (Id. at p. 357.) “With a special verdict, unlike a 

general verdict or a general verdict with special findings, a reviewing court will not infer 

findings to support the verdict.” (Id. at p. 358.) We are “‘not permitted to choose 

between inconsistent answers.’” (Ibid.) Rather, “the proper remedy for an inconsistent

special verdict is a new trial.” (Ibid.)

The first premise of defendants’ inconsistency argument is that, to find for 

plaintiffs on the breach of contract claim, “the jury necessarily had to find that the MOU 

had been approved by the [TCGI] Board . . . .” The second premise is that the jury must 

also have found that the Board did not approve the MOU, since “the only basis for fraud 

was the purported misrepresentation in the MOU that the MOU had been approved by the 

TCGI Board.” They conclude on that basis that the jury returned irreconcilable verdicts, 

which must be reversed.

The validity of defendants’ syllogism turns on whether the first premise is true. In 

our view, it is not. The jury was not asked to make an express finding that the TCGI 

Board had approved the MOU. The special verdict only asked the jury to decide: “Did 

[TCGI] agree to the terms of the contract?” There is some basis to find that it did: Link 

signed the MOU in his capacity as Chief Executive Officer of TCGI.10 “Under statutory 

10 We do not know if this is the theory argued to the jury by plaintiffs, as the 

parties’ opening statements and closing arguments are not part of the trial transcript in 

our record. The trial court did not have a court reporter available for those portions of the 

proceedings, and the parties apparently chose not to provide their own.
31

law, an officer can bind the corporation in dealings with third parties in which the officer 

has actual or apparent authority.” (GAB Business Services, Inc. v. Lindsey & Newsom 

Claim Services, Inc. (2000) 83 Cal.App.4th 409, 421, disapproved on other grounds by 

Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154; Corp. Code, § 208, subd. (b); see also 

Biren v. Equality Emergency Medical Group, Inc. (2002) 102 Cal.App.4th 125, 137 

[“Larger corporations often have formal board committees to recommend the approval of 

a variety of contracts. But small corporations . . . conduct much of their official business 

informally. . . . The practice of allowing officers to approve contracts is so prevalent in 

some close corporations, for example, that they bind the entity even though the officer 

should have obtained board approval”].) 

Thus, as relevant here, the jury found that TCGI—implicitly, Link, on behalf of 

TCGI—agreed to the following term: “TCGI represents the MOU has been approved by 

the TCGI Board of Directors with the approval attached.” On its face, there is no 

irreconcilable conflict between the propositions that (1) TCGI represented that the MOU 

had been approved by the TCGI Board and (2) the representation in the MOU that the 

TCGI Board had approved the MOU was false. Indeed, that is just plaintiffs’ version of 

what happened.

Defendants apparently interpret the MOU’s reference to board approval to mean

that board approval—and specifically approval in the form of a fully executed version of 

the attachment to the MOU—was a condition precedent to contract formation: “Board 

approval was a necessary term of the MOU . . . . As such, if the MOU had been 
32

approved, there could be no misrepresentation as to the Board’s approval of the 

MOU . . . .” Such an interpretation, however, is in some tension with the language of the 

MOU. There is no reason for TCGI to “represent[]”anything about what its board had 

done if the parties’ intent was that a fully executed copy of the board resolution must be 

attached to the MOU for a contract to be formed. Instead, something to the effect of “A 

copy of the resolution of the TCGI Board approving the MOU is attached here as Exhibit 

A,” perhaps also with a proviso that the MOU only takes effect upon attachment of a 

copy of a fully executed board resolution, would seem more likely. 

When possible, we interpret contracts to give effect to every part and avoid 

constructions that render terms surplusage. (See Civ. Code, § 1641 [contracts should be 

interpreted “so as to give effect to every part”]; Code Civ. Proc., § 1858 [in construing an 

instrument, “where there are several provisions or particulars, such a construction is, if 

possible, to be adopted as will give effect to all” (italics added)]; Rice v. Downs (2016) 

248 Cal.App.4th 175, 186 [“An interpretation that leaves part of a contract as surplusage 

is to be avoided”].) Viewed in that light, a more natural reading of the term at issue is 

that TCGI was representing in the MOU that its Board had adopted a resolution in the 

form of the attached document. Thus, whether the attachment to the MOU was signed by 

all the TCGI board members is not necessarily dispositive of whether the board ever 

adopted such a resolution.

We conclude that defendants have not shown the jury’s factual findings to be 

inconsistent or irreconcilable.
33

E. Reasonable reliance

Defendants contend that there is no substantial evidence to establish that eXteres 

or Winch reasonably relied on the alleged misrepresentation in the MOU that the TCGI 

Board had approved the MOU. Plaintiffs contend the argument is waived, and in any 

case without merit. We decline to addressthe parties’ disagreement regarding waiver, 

finding it more expedient to decide the issue. We find substantial evidence supports a

finding of reasonable reliance.

“‘“Except in the rare case where the undisputed facts leave no room for a 

reasonable difference of opinion, the question of whether a plaintiff’s reliance is 

reasonable is a question of fact.”’” (Thrifty Payless, Inc. v. The Americana at Brand, 

LLC (2013) 218 Cal.App.4th 1230, 1239.) A trial court sits as the thirteenth juror in 

ruling on a motion for new trial (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 

498, 507), but we do not. “‘“When a finding of fact is attacked on the ground that there 

is not any substantial evidence to sustain it, the power of an appellate court begins and 

ends with the determination as to whether there is any substantial evidence contradicted 

or uncontradicted which will support the finding of fact.”’” (Orozco v. WPV San Jose, 

LLC (2019) 36 Cal.App.5th 375, 390 (Orozco).) When two or more inferences can 

reasonably be deduced from the evidence, we may not substitute our deductions for those 

of the finder of fact. (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 

559, 571.)
34

Defendants assert that Winch “knew” that the MOU’s representation that the 

TCGI board had approved it was “untrue,” and therefore he and eXteres could not have 

reasonably relied on that representation. As discussed above, however, knowing whether 

all TCGI board members had signed the attachment to the May 24, 2018 version of the 

MOU and knowing whether the TCGI board had approved the MOU are not necessarily 

the same thing. Defendants also emphasize that, on cross-examination, Winch admitted 

that the absence of Conrad’s and Sangree’s signatures could be seen as “a reason” to 

think the Board had not approved the MOU, as was the email accompanying the May 24, 

2018 version of the MOU, stating that Sangree wanted to look through the document as 

to possible “wording changes.” Winch further testified, however, that “that’s not how 

[he] interpreted it.” 

Winch explained that he took Link’s signature on the May 24, 2018 version of the 

MOU to mean that Link was conveying an offer, not just circulating another draft. He 

took Link’s statement that Sangree might have some changes to mean that both Link and 

Conrad—a majority of the TCGI board—were “on board” with the current version of the 

MOU. Based on the state of their negotiations, Winch understood that any changes 

Sangree might propose would be wording details, rather than substantive changes, and 

that if Sangree had changes, Link would “recall or rescind the offer.” Winch left an 

ample period for any such retraction before he accepted the offer. Furthermore, although 

Winch had felt it “prudent” for the TCGI board to approve the MOU, and “[a]t some 

point” he would want to have a copy of the board resolution, he did not have any 
35

“specific knowledge” that a board resolution was required for the MOU to be effective. 

In this context, the jury found it reasonable for Winch to take at face value the 

representation in the MOU that it had been approved by the TCGI board, as he testified 

he had done. The trial court, too, in ruling on defendants’ new trial motion, implicitly 

found Winch’s testimony credible and his reliance reasonable. On this record and under 

the applicable, deferential standard of review, we may not disturb those findings.

F. Tortious interference with contract

Defendants argue that the evidence could not support a finding in favor of 

plaintiffs on their tortious interference with contract cause of action. In their view, 

eXteres’s “own conduct” caused the termination of the relevant contracts between 

eXteres and third parties, and it was “failure to mitigate” that caused eXteres’s alleged

damages. We find no lack of substantial evidence to support the verdict. (See Orozco, 

supra, 36 Cal.App.5th at p. 390.)

Defendants contend that eXteres “unilaterally” terminated the contracts at issue, so

there is no evidence of causation in support of the tortious interference claim. It has long 

been the rule, however, that a plaintiff “need not allege an actual or inevitable breach of 

contract in order to state a claim for disruption of contractual relations.” (Pacific Gas & 

Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1129.) It is enough that the 

defendants’ actions make “plaintiff’s performance . . . more costly or more burdensome.” 

(Ibid.) The July 19, 2018 letter from defendants’ attorney, although phrased as a 

“request[],” is reasonably interpreted as a threat of litigation if plaintiffs continued to 
36

have contact with its clients. Those clients, after all, had “existing,” albeit indirect, 

“business relationships with TCGI,” given their use of TCGI technology resold by 

eXteres. We see no reason why such a threat may not be considered actionable 

interference. 

Relatedly, defendants’ theory is that eXteres should have mitigated its damages by 

continuing to work with its existing clients for TCGI’s technology. It is not apparent, 

however, why a finder of fact might be required to find continuing with those contracts

despite TCGI’s cease-and-desist request/demand to be a reasonable, rather than 

extraordinary, mitigation effort.11 (See State Dept. of Health Services v. Superior Court

(2003) 31 Cal.4th 1026, 1044 [“Under the avoidable consequences doctrine as recognized 

in California, a person injured by another's wrongful conduct will not be compensated for 

damages that the injured person could have avoided by reasonable effort or expenditure.” 

(Italics added.)].) 

Moreover, defendant’s arguments about both causation and mitigation rest on the 

premise that the July 19, 2018 letter expressed TCGI’s willingness to honor the parties’ 

earlier oral contracts. It is questionable whether the letter is best read to express such a 

sentiment. Arguably, the letter repudiates the parties’ prior agreements, while stating a 

11 Additionally, as plaintiffs correctly note, the jury instruction on mitigation that 

defendants cite in briefing, derived from CACI No. 358, applies on its face only to the 

breach of contract cause of action, and not the tortious interference claim. Defendants 

did not request an equivalent jury instruction regarding mitigation of damages from 

tortious interference with contract. Although we exercise our discretion to decide this 

issue on the merits, we acknowledge plaintiffs’ argument that this claim of error was in 

any case forfeited.
37

willingness to negotiate a new, more limited “reseller arrangement”: “Although it is 

unfortunate that eXteres and TCGI cannot move forward as originally contemplated by 

the parties, TCGI is open to discussions in regard to engaging your company through a 

reseller arrangement . . . .” The statement about the parties’ “existing . . . contracts” is 

phrased in the subjunctive: “Any existing revenue sharing contracts between the two 

companies would be honored by TCGI.” That suggests that TCGI’s willingness to honor 

those agreements was conditioned on entering into this new business arrangement. 

Particularly in the context of the rest of the letter, such language is hardly an unequivocal 

reassurance that TCGI intended to continue honoring the parties’ existing oral 

agreements.

Defendants have not shown that the verdict on the tortious interference cause of 

action lacks the support of substantial evidence.

G. Statute of frauds

Defendants note that Link signed the May 24, 2018 version of the MOU as well as 

the attached board resolution, but Conrad did not. In their view, one provision of the 

MOU required Conrad’s individual written consent, and not just the assent of the TCGI 

board, that is, the provision contemplating that Link and Conrad would grant TCGI a 

“license for the exclusive perpetual use” of their technology once their then-pending 
38

patent application was approved. They contend that the lack of Conrad’s signature means 

the entire MOU is invalid under the statute of frauds.12 Not so.

13

Under California Civil Code section 1624, subdivision (a)(1), a contract “not to be 

performed within a year from the making thereof” is “invalid” unless the contract itself 

“or some note or memorandum thereof” is “in writing and subscribed by the party to be 

charged or by the party’s agent.” This law, however, has been interpreted literally and 

narrowly by California courts. (See Plumlee v. Poag (1984) 150 Cal.App.3d 541, 548.) 

“Only those contracts which expressly preclude performance within one year are 

unenforceable.” (Ibid.; see White Lighting Co. v. Wolfson (1968) 68 Cal.2d 336, 343 

(White Lighting) [statute of frauds “applies only to those contracts which, by their terms, 

cannot possibly be performed within one year”].) “‘It has been repeatedly held that, if an 

12 The complete text of this provision is as follows: “Jay Conrad and Anthony 

Link (“Inventors”) has [sic] developed a text messaging software platform 

(“Connectionstm”) and have also filed a patent application for U.S. Non-Provisional 

Patent titled System and Method for Generating a Tracked Message with serial number 

US15/684926 Docket 4705 (“Patent”). The Parties along with the Inventors agree to 

execute a mutually agreeable license for the exclusive perpetual use of the Patent wherein 

TCGI will be the majority beneficial owner of the rights to the Patent and associate 

patents, if any, filed or to be filed associated with the Patent. Such agreement shall be 

executed upon the issuance of the Patent herein referenced.”

13 Plaintiffs are incorrect that defendants failed to raise their statute of frauds 

defense in the trial court. The defense was pleaded as an affirmative defense in 

defendant’s first amended answer, and the issue was raised in defendants’trial brief. 

During trial, the statute of frauds was asserted as a basis for nonsuit and for a directed 

verdict. That preserved the argument for appeal. (Carrier & Braddock, Inc. v. S.W. 

Straus & Co. (1931) 213 Cal.508, 513 [motion for nonsuit not too late]; Ellis v. Klaff

(1950) 96 Cal.App.2d 471, 475, disapproved on other grounds in Sterling v. Taylor

(2007) 40 Cal.4th 757, 769 [motion for new trial not too late].) 
39

agreement whose performance would otherwise extend beyond a year may be completely 

performed within a year on the happening of some contingency, it is not within the statute 

of frauds.’” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 674 (Foley) [quoting 

Carnig v. Carr (1897) 167 Mass. 544].) 

It does not matter how improbable performance of the contract within a year may 

be. (See White Lighting, supra, 68 Cal.2d. at p. 343, fn. 2 [generally there “must not be 

the slightest possibility that it can be fully performed within one year”]; e.g., Gaskins v. 

Security-First Nat. Bank of Los Angeles (1939) 30 Cal.App.2d 409, 418-419 (Gaskins)

[contract to care for minor children of an incompetent person during their minority 

“might be fully performed in one year from the date of its execution, as, for instance, 

would be the case should all the minor children have died within the first year”].) The 

applicability of the statute of frauds is “analyzed prospectively, based on the intentions of 

the parties and the terms of the agreement at the time it is made.” (Foley, supra, 47 

Cal.3d at p. 674, fn. 18.) The test is whether there is a “‘possibility of performance,’” not 

one of “‘probable expectations.’” (Ibid.)

In July 2018, when Winch returned the signed MOU, there was a possibility that 

the license provision at issue could have been performed within a year, even though it

contemplated a “perpetual” license. Under the MOU, such a license was to be executed 

only “upon the issuance of the Patent. . . .” But the then-pending patent application could 

have been denied at any point, and thus no license for the technology from Link or 

Conrad in their capacity as inventors—perpetual or otherwise—would be necessary or 
40

required. There remained the possibility, therefore, that within a year neither Link nor 

Conrad would have any obligations remaining to perform under the clause at issue. As 

such, the statute of frauds does not apply. (See Gaskins, supra, 30 Cal.App.2d at pp. 

418-419.) 

Defendants do not contend that Conrad’s individual written consent was required 

for any other provision of the MOU to be valid. We conclude, therefore, that they have 

not demonstrated that the MOU is invalid under the statute of frauds.

III. DISPOSITION

The judgment is affirmed. Winch and eXteres are awarded costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

RAPHAEL

J.

We concur:

SLOUGH

Acting P. J.

MENETREZ

J.