Court Opinion

ID: 4701549
Source: CourtListenerOpinion
Date Created: 2021-07-06 20:00:33.477023+00
Date Added: 2024-06-11T08:06:18.658884
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUL 6 2021
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

SIMULADOS SOFTWARE, LTD.,                       Nos. 20-15179
                                                     20-16258
                Plaintiff-Appellee,
                                                D.C. No. 5:12-cv-04382-EJD
 v.

PHOTON INFOTECH PRIVATE, LTD.,                  MEMORANDUM*

                Defendant-Appellant.

                   Appeal from the United States District Court
                     for the Northern District of California
                   Edward J. Davila, District Judge, Presiding

                       Argued and Submitted June 16, 2021
                            San Francisco, California

Before: SCHROEDER, M. SMITH, and VANDYKE, Circuit Judges.

      We previously affirmed the jury’s verdict for Plaintiff-Appellee Simulados

Software, Ltd. (Simulados), but remanded the case to the district court because that

court improperly granted recission of the contract. Simulados Software, Ltd. v.

Photon Infotech Priv., Ltd., 771 F. App’x 732 (9th Cir. 2019). On remand, the

district court determined that, because of California law forbidding double recovery,

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Simulados could not collect damages on both its contract and fraud claims and

instead awarded Simulados $309,674 on its fraud claim and $0 on its contract claim.

Additionally, the district court awarded attorneys’ fees to Simulados. Defendant-

Appellant Photon Infotech Private, Ltd. (Photon) appeals both decisions. We have

jurisdiction pursuant to 28 U.S.C. § 1291. Because the parties are familiar with the

facts, we do not recount them here, except as necessary to provide context to our

ruling. We AFFIRM the decisions of the district court.

                                      Damages

        “Under established [California] law, the prevailing plaintiff may not recover

tort damages and contract damages for the same wrong, even though the plaintiff

might have set forth alternate theories of recovery.” Ambassador Hotel Co., Ltd. v.

Wei-Chuan Inv., 189 F.3d 1017, 1031–32 (9th Cir. 1999); see also Tavaglione v.

Billings, 847 P.2d 574, 580 (Cal. 1993) (en banc). The district court held, and

Simulados does not dispute, that Simulados presented the same evidence for

damages on the breach of contract and fraud in the inducement claims. Because the

jury heard the same evidence for both damages requests, the rule against double

recovery applies, and Simulados can receive damages for one of its claims, but not

both.

        Once it is established that the plaintiff cannot recover on both claims, the

plaintiff has discretion to choose a claim on which to recover. See Solomon v. N.

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Am. Life & Cas. Ins. Co., 151 F.3d 1132, 1137 (9th Cir. 1998). However, in some

circumstances, the economic loss doctrine requires the plaintiff to recover contract

damages, rather than tort damages. See Robinson Helicopter Co., Inc. v. Dana

Corp., 102 P.3d 268, 272–73 (Cal. 2004). California law asks whether the “conduct

. . . violates a duty independent of the contract arising from principles of tort law.”

Erlich v. Menezes, 981 P.2d 978, 983 (Cal. 1999). To avoid the economic loss

doctrine, the tortious conduct must be “completely independent of the contract or

arise[] from conduct which is both intentional and intended to harm.” Id. California

courts have cited fraud claims as example of tortious conduct that are independent

of contractual harms. See Robinson, 102 P.3d at 274–75; Erlich, 981 P.2d at 983–

84.   Simulados’s fraud claim was based on Photon’s conduct that was both

intentional and intended to harm, as we affirmed during the previous appeal. See

Simulados, 771 F. App’x at 734 (“Photon made these representations with

knowledge of their falsity or with reckless disregard of their truth” and “intended to

induce reliance (i.e., to induce Simulados to sign the contract).”). Accordingly, the

economic loss doctrine does not prevent the district court from awarding damages

for the tort claim.

      Additionally, the liability cap in Paragraph 5.2 of the contract does not apply

to Simulados’s tort claim.     Although “[c]lauses of this type have long been

recognized as valid in California,” Food Safety Net Servs. v. Eco Safe Sys USA, Inc.,

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147 Cal. Rptr. 3d 634, 641–42 (Ct. App. 2012) (citation and internal quotation marks

omitted), California Civil Code “§ 1668 renders [a] limitation of liability

unenforceable to the extent that it would insulate [a defendant] from liability for

fraud or willful injury,” FiTeq Inc. v. Venture Corp., 169 F. Supp. 3d 948, 956 (N.D.

Cal. 2016). Simulados could not “rationally calculate the possibility that” Photon

would “deliberately misrepresent terms critical to [the] contract.” Robinson, 102

P.3d at 275–76. Thus, Simulados’s tort claim is not subject to the contract’s liability

cap.

       Finally, contrary to Photon’s suggestion, our previous decision does not

mandate that Simulados recover contract damages. We “agree[d] that there is an

$18,848 cap on Simulados’s recovery for breach of contract” and that the liability

cap “is enforceable with respect to Simulados’s breach of contract claim.”

Simulados, 771 F. App’x at 734. But we never stated that Simulados must collect

contract damages, rather than fraud damages. Once the district court correctly held

that Simulados could collect tort damages, the $18,848 cap no longer applied.

Therefore, we affirm the district court’s decision to award $309,674 in tort damages.

                                  Attorneys’ Fees

       Photon first argues that Simulados could not receive attorneys’ fees on the

contract claim because Simulados was not the “prevailing party” pursuant to

California Civil Code § 1717. “Rather than focusing on who receives the net

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monetary award, section 1717 defines the prevailing party as the one who recovers

‘a greater relief in the action on the contract.’” Sears v. Baccaglio, 70 Cal. Rptr. 2d

769, 774 (Ct. App. 1998) (quoting Cal. Civil Code § 1717(b)(1)). “Even when no

party receives a net recovery, a party may prevail under section 1717.” Id. at 779.

Simulados prevailed on the breach of contract claim. The jury announced its verdict

for Simulados, and we affirmed that verdict on appeal. Simulados, 771 F. App’x at

734. That the district court ultimately awarded $0 in damages on the contract claim

does not affect Simulados’s status as the prevailing party.

         Second, Photon contends that Simulados could not collect attorneys’ fees for

the tort claim. “If a contractual attorney fee provision is phrased broadly enough,

. . . it may support an award of attorney fees to the prevailing party in an action

alleging both contract and tort claims.” Santisas v. Goodin, 951 P.2d 399, 405 (Cal.

1998).     Applying California law for contract interpretation, see Mountain Air

Enters., LLC v. Sundowner Towers, LLC, 398 P.3d 556, 561 (Cal. 2017), we

conclude that the district court did not err in awarding attorneys’ fees for the tort

claim.

         Paragraph 9 of the contract awards attorneys’ fees to the prevailing party when

a party “seeks to enforce its rights under [the] Agreement (whether in contract, tort

or both) or seeks a declaration of any rights or obligations under [the] Agreement.”

In Exxess Electronixx v. Heger Realty Corp., 75 Cal. Rptr. 2d 376 (Ct. App. 1998),

                                            5
the court concluded that the relevant attorneys’ fees provision did not reach tort

claims, see id. at 386, where the contract awarded attorneys’ fees when “any Party

. . . br[ought] an action or proceeding to enforce the terms [of the contract] or declare

rights [there]under,” id. at 379 (emphasis added). In contrast, here a party can collect

fees to “enforce its rights under [the] Agreement,” including “tort” rights, which

includes the right to not be fraudulently induced to enter into the contract. Paragraph

9’s language is more similar to the contract in Thompson v. Miller, 4 Cal. Rptr. 3d

905 (Ct. App. 2003), where the attorneys’ fees provision that awarded fees for “any

dispute under [the] Agreement,” id. at 910, was deemed to reach tort claims, id. at

913–14. Additionally, the parties’ decision here to add the parenthetical “whether

in contract, tort or both” particularly supports the notion that a plaintiff prevailing

on a tort claim “under [the] Agreement” can collect attorneys’ fees.

      Third, Photon argues that the district court could not reinstate the attorneys’

fees award from before the first appeal. Even if in the first appeal we technically

vacated the district court’s original award of attorneys’ fees, see Simulados, 771 F.

App’x at 735, that court could incorporate its prior analysis, which we did not

explicitly disturb in the first appeal, and confirm the earlier award upon remand. See

Elks Nat. Found. v. Weber, 942 F.2d 1480, 1484 (9th Cir. 1991) (“On remand by

this court, the district court confirmed its previous decision.”).           The court

presumably did so here given its fee award.

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      Fourth, Photon believes that the district court abused its discretion in the

amount of attorneys’ fees it awarded. The liability cap in Paragraph 5.2 does not

apply to attorneys’ fees.     Paragraph 5.2 addresses only “Photon’s aggregate

liability,” violating the “mutuality of remedy” embodied in Section 1717 for

attorneys’ fees for contract claims. Brown Bark III, L.P. v. Haver, 162 Cal. Rptr. 3d

9, 16 (Ct. App. 2013). Additionally, as noted above, Paragraph 5.2 does not pertain

to Simulados’s tort claim. Finally, the district court applied the lodestar method for

determining the amount of post-appeal attorneys’ fees,1 see Ketchum v. Moses, 17

P.3d 735, 741 (Cal. 2001), considered the appropriate factors, and compared the

rates for Simulados’s attorneys to other fee awards in the Northern District of

California. Although Photon contends that their attorneys had “fewer hours of work

and a lower cost per page and per word,” the district court acted within its discretion

to conclude that “[t]he post-appeal work consisted of significant legal research into

complex questions of California law” and that the number of hours expended was

reasonable. Accordingly we affirm the district court’s attorneys’ fees award.

      AFFIRMED.

1
 Photon does not argue that that the district court awarded an unreasonable amount
of attorneys’ fees for work performed before the first appeal. Therefore, Photon has
waived any challenge to the reasonableness of those fees. See Tsao v. Desert Palace,
Inc., 698 F.3d 1128, 1137 n.13 (9th Cir. 2012).

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