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U.S.C.A. Docket No. 09-56584
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HANNIBAL PICTURES , INC. a California corporation,
Plaintiff and Appellee, vs.
SONJA PRODUCTIONS, LLC, a Delaware limited liability company, andSONJA TREMONT-MORGAN, an individual,
Defendants and Appellants.
______________________________
On Appeal from The United States District Court for theCentral District of California, Los Angeles Division
Case No. 2:06-cv-01814-WDK
The Honorable William D. Keller______________________________
APPELLEE’S BRIEF______________________________
HAMRICK & EVANS, LLPA. Raymond Hamrick, Bar. No.11943810 Universal City Plaza, Suite 2200Universal City, California 91608Telephone: (818) 763-5292
ESNER, CHANG & BOYER Stuart B. Esner, Bar No. 105666 Andrew N. Chang, Bar No. 84544 Holly N. Boyer, Bar No. 221788234 East Colorado Blvd., Suite 750Pasadena, California 91101Telephone: (626) 535-9860
Attorneys for Plaintiff and Appellee Hannibal Pictures, Inc.
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CORPORATE DISCLOSURE STATEMENT
Hannibal Pictures, Inc. is a California corporation with no parent or
subsidiary, and no publicly held company owns 10% or more of Hannibal Pictures,
Inc. stock.
Dated: October 29, 2010
By: s/ Stuart B. Esner
Stuart B. EsnerEsner, Chang & Boyer234 E. Colorado Boulevard, Suite 750Pasadena, CA 91101(626) 535-9860
Attorneys for Plaintiff and AppelleeHannibal Pictures, Inc.
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TABLE OF CONTENTS
JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW . . . . . . . . . . . 1
STATEMENT OF THE PERTINENT STATUTES . . . . . . . . . . . . . . . . . . . . . 2
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. Plaintiff Hannibal Pictures - a successful, establishedproducer of films distributed worldwide and starringOscar-winning actors. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Defendant Sonja Morgan represents that she, herhusband, and her company has $25-50 million toproduce up to five films. . . . . . . . . . . . . . . . . . . 5
B. Ms. Morgan Fraudulently Misrepresents Her Cash Funds OnHand To The Independent Film Market, Lures Hannibal WithHer Misrepresentations Of Millions In Cash, And InducesHannibal To Agree To Allow Morgan To Fund The ProductionOf Fast Flash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
C. The Terms Of The Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Hannibal Satisfies Its Primary Obligation To Secure JohnTravolta’s Written Confirmation To Star In The Film. . . . . . . 9
E. Morgan Breaches The Contract And Fails To Provide TheRequired Proof Of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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F. The Collapse Of The Film Production Causes HannibalSignificant Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
APPELLEE’S REBUTTAL TO DEFENDANTS’ STATEMENTOF CASE AND STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . 17
SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
I. DEFENDANTS’ FAILURE TO COMPLY WITH FEDERAL RULE OF CIVIL PROCEDURE 50(a), FORFEITS THEIRREQUEST THAT THIS COURT REVERSE THE DISTRICTCOURT’S DENIAL OF THE RENEWED MOTIONS FORJUDGMENT AS A MATTER OF LAW . . . . . . . . . . . . . . . . . . . . . 24
II. EVEN IF THE ISSUE HAD NOT BEEN WAIVED BYDEFENDANTS, THE ECONOMIC LOSS RULE DOES NOTEXTEND TO BAR HANNIBAL’S FRAUD BASED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
A. The Evolution Of The Economic Loss Rule. . . . . . . . . . . . . . 29
B. The District Court Properly Rejected Defendants’ Contention That The Economic Loss Rule Applied To BarHannibal From Recovering In Tort. . . . . . . . . . . . . . . . . . . . . 34
(i.) As Aptly Concluded By The District Court, Defendants’ Fraudulent Conduct Was Extraneous To The Contract And Thus Not Barred By The Economic Loss Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(ii.) Contrary To Defendants’ Position, The Economic Loss Rule Does Not Bar Tort Recovery In Every Case Where Only Economic Damage Occur. . . . . . . . 41
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III. IN ANY EVENT, SONJA MORGAN WAS NOT A PARTY TO THE CONTRACT, AND THUS CANNOT RELY UPON THEECONOMIC LOSS RULE AS A SHIELD FROM TORTLIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
IV. AS CONCLUDED BY THE DISTRICT COURT, SUBSTANTIAL EVIDENCE SUPPORTS THE DAMAGESAWARD AND THUS NEITHER A REMITTITUR NOR A NEW TRIAL IS WARRANTED . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
A. Defendants Misrepresent The Applicable Standard Of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
B. Hannibal Proved With Reasonable Certainty That The FilmWould Have Been Completed And Generated Net ProfitsShown By Expert Testimony. . . . . . . . . . . . . . . . . . . . . . . . . . 53
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
STATEMENT OF NO RELATED CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CERTIFICATE OF COMPLIANCE WITH RULE 32(a) . . . . . . . . . . . . . . . 61
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TABLE OF AUTHORITIES
CASES
Aas v. Superior Court, 24 Cal.4th 627 (2000) . . . . . . . . . . . . . . . . . . . . . . . . 29, 44
Advisor’s Capital Investments Inc., v. Cumberland Cas. & Sur. Co., No.8:05-CV-404-T-23MAP, 2007 U.S. Dist. LEXIS 5865, 2007 WL 220189 (M.D. Fla. Jan. 26, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4th 464 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Astrium, S.A.S. v. TRW, Inc. 254 F.Supp.2d 1129 (C.D. Cal. 2003) . . . . . . . . . . 45
Calloway v. City of Reno, 116 Nev. 250, 993 P.2d 1259 (Nev. 2000) . . . . . . . . . 32
Carroll v. Nakatani, 342 F.3d 934 (9th Cir.2003) . . . . . . . . . . . . . . . . . . . . . . . . 50
City Solutions, Inc. v. Clear Channel Communications, Inc., 365 F3d 835 (9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
County of Santa Clara v. Atlantic Richfield Co.,137 Cal.App.4th 292 (2006) . . 33
Desrosiers v. Flight Int'l of Florida Inc., 156 F.3d 952 (9th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 53
Erlich v. Menezes, 21 Cal.4th 543 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 44
Frances T. v. Village Green Owners Assn., 42 Cal. 3d 490 (1986) . . . . . . . . 47, 49
Frank E. Maddocks, Inc. v. University Medical Products/USA, Inc. 2005 Cal.App. Unpub. Lexis 7546 (Cal.App. 2 Dist., Aug. 22, 2005) . . . . . . . . 44
Freund v. Nycomed Amersham, 347 F.3d 752 (9th Cir.2003) . . . . . . . . . . . . . . . 26
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Giles v. General Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007) . . 31-33
Grupe v. Glick, 26 Ca1.2d 680 (1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
H.B. Filmes, LTDA v. CBS, Inc., 2004 U.S. App. Lexis 8567, 98 Fed. Appx. 596(9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45, 46
Hangarter v. Provident Life & Acc. Ins. Co., 373 F3d 998 (9th Cir. 2004) . . . . . 53
Humetrix, Inc. v. Gemplus, S.C.A., 268 F.3d 910 (9th Cir. 2001) . . . . . . . . . . . . 58
Jimenez v. Superior Court 29, Cal.App.4th 473 (2002) . . . . . . . . . . . . . . . . . 43, 44
Kids’ Universe v. In2Labs, 95 Cal.App.4th 870 (2002) . . . . . . . . . . . . . . . . . 53, 55
Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877 (9th Cir. 2000) . . . . . . . . . 50
Krzyzanowsky v. Orkin Exterminating Co., Ins., No. C 07-05362 SBA, 2009 U.S.Dist. LEXIS 14332 (N.D. Cal. Feb. 24, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Las Palmas Assocs. v. Las Palmas Center Assocs., 235 Cal.App.3d 1220 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 38, 43
Lazar v. Superior Court, 12 Cal.4th 631 (1996) . . . . . . . . . . . . . . . . . 37, 38, 40, 43
Lincoln Gen. Ins. Co. v. Access Claims Admin., Inc., 2007 U.S. Dist. LEXIS67172, 2007 WL 2492436 (E.D. Cal. Aug. 29, 2007) . . . . . . . . . . . . . . . . . . . . . 40
Luigino’s Int’l, Inc. v. Miller, 2009 U.S. App.Lexis 2614, 311 Fed. Appx. 289(11th Cir. Ga. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Maggio, Inc. v. UFW, 227 Cal.App.3d 847 (1991) . . . . . . . . . . . . . . . . . . . . . 56, 57
McEuin v. Crown Equip. Corp., 328 F.3d 1028 (9th Cir. 2003) . . . . . . . . . . . . . 52
McLeod v. Barber, 764 So. 2d 790 (Fla. App. 2000) . . . . . . . . . . . . . . . . . . . . . . 48
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Michaelis v. Benavides, 61 Cal.App.4th 681 (1998) . . . . . . . . . . . . . . . . . . . . . . 49
Mirzai v. Matossian, 2004 Cal.App. Unpub. LEXIS 9107 (Cal.App.1st Dist. Oct. 8, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 44
N/S Corp. v. Liberty Mut. Ins. Co., 127 F.3d 1145 (9th Cir. 1997) . . . . . . . . . . . 17
Natural Soda Prod. Co. v. City of Los Angeles, 23 Ca1.2d 193 (1943) . . . . . . . . 56
Nitco Holding Corp. v. Boujikian, 491 F.3d 1086 (9th Cir. 2007) . . . . . . . . . 26, 27
Parlour Enterprises, Inc. v. The Kirin Group, Inc., 152 Cal.App.4th 281 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53, 55
Reynolds v. Bement 36 Cal.4th 1075 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-31, 37, 40, 41-43
S.M. Wilson & Co. v. Smith Internat., Inc. 587 F.2d 1363 (1978) . . . . . . . . . . . 44
Sacramento Regional Transit Dist. v. Grumman Flxible 158 Cal.App.3d 289 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Simpkins v. S. Wine & Spirits of Am., Inc., 2010 U.S. Dist. LEXIS 91971 (N.D.Cal. Aug. 9, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
StreamCast Networks, Inc. v. IBIS LLC, No. CV 05-04239, 2006 WL 5720345 (C.D. Cal. May 2, 2006) . . . . . . . . . . . . . 37
W. Emulsions, Inc. v. BASF Corp., No. 05-CV-5246 CBM(SSx), 2007 U.S. Dist.LEXIS 4837663 (C.D. Cal. Jan. 17, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Walker v. Signal Cos., Inc., 84 Cal.App.3d 982 (1978) . . . . . . . . . . . . . . . . . . . . 37
Wallace v. City of San Diego, 479 F.3d 616 (9th Cir. 2007) . . . . . . . . . . . . . . . . 26
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Wei Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020 (9th Cir. 2003) . . . . . . . . 26
Williams v. Bear Stearns & Co., 1998 Fla. App. LEXIS 16012, 725 So. 2d 397(Fla. App. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001) . . 26
Zamora v. Shell Oil Co., 55 Cal.App.4th 204, 208-213 (1997) . . . . . . . . . . . . . . 44
Zhang v. American Gem Seafoods, Inc., 339 F.3d 1020 (9th Cir. 2003) . . . . . . . 26
STATUTES AND RULES
Fed. Rule of Civ. Proc., Rule 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Fed. Rule of Civ. Proc., Rule 50(a) . . . . . . . . . . . . . . . . . . . . . . 1, 23, 25-27, 51, 52
Fed. Rule of Civ. Proc., Rule 50(b) . . . . . . . . . . . . . . . . . . . . . . . . 23-26, 28, 34, 49
Fed. Rule of Civ. Proc., Rule 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 27, 50
Ninth Cir. Rule 28-2.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Circuit Rule 28-2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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JURISDICTIONAL STATEMENT
Plaintiff-Appellee Hannibal Pictures Inc. agrees with the jurisdictional
statement set forth in Appellants’ Opening Brief (“AOB”) at p. 1.
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
1. Whether Defendants have waived their contentions that the economic
loss rule precludes Plaintiff’s recovery for any tort damages and that they are
entitled to judgment as a matter of law as to the claimed excessive damages,
because neither issue was raised in a previous Rule 50(a) motion.
2. Even assuming arguendo that the issues are not waived, whether the
economic loss rule bars a fraud claim which is not grounded in the performance of
a contract.
3. Whether Defendant Sonja Morgan, who was not even a party to the
contract, can rely on the economic loss rule to shield herself from fraud liability
just because Plaintiff has a breach of contract claim against another Defendant.
4. Whether the District Court properly denied Defendants’ post-trial
motion challenging the jury’s award of compensatory damages, where there is
substantial evidence including the testimony from a well qualified expert that it is
reasonably certain that absent Defendants’ wrongful conduct, Plaintiff, an
established production company with a proven track record, would have
completed the film which would have generated the very net profits awarded by
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the jury.
STATEMENT OF THE PERTINENT STATUTES
An addendum of the pertinent statutes (Federal Rules of Civil Procedure 50
and 59) is attached to the end of this brief. Ninth Cir. Rule 28-2.7.
STATEMENT OF THE CASE
Plaintiff Hannibal Pictures, Inc. is a well-established independent producer
of financially successful, worldwide distributed films, which star respected actors
including Oscar winners. Hannibal’s CEO Richard Rionda set out to produce the
film “Fast Flash to Big Bang” by purchasing the option to the screenplay written
by a well-known screenwriter; securing a commitment from its regular lender
Royal Bank of Scotland to finance the film’s production; obtaining (by virtue of
its reputation and track record) John Travolta’s commitment to star in the film
alongside his preferred co-star Rosario Dawson; and making several millions of
dollars of pre-sales to international film markets in anticipation of the film’s
production and distribution. The film was destined to follow the financially
successful path of Hannibal’s other films distributed to global film markets; that
is, until Defendants Sonja Morgan and Sonja Productions entered the scene.
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1Record citations are as follows:- Reporter’s Transcript - Date: page- Appellant’s Excerpts of Record - “ER”: page- Appellees’ Supplemental Excerpts of Record - “SER”: page- Clerk’s Docket: “CD”: docket number
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(6/9RT:19,149-154, 6/10RT:8-15, 6/11RT:18.)1
Sonja Morgan, then the wife of John Adams Morgan, an heir to the J.P.
Morgan banking empire, made numerous misrepresentations to Hannibal which
induced Hannibal to enter into an agreement with Morgan and her production
company to fund the film’s production. These misrepresentations led Hannibal to
believe that Ms. Morgan had ample ready cash to see the project through to
completion. When it suddenly turned out Ms. Morgan lacked these funds and
Travolta withdrew, the project fell through, and Hannibal lost millions and was
effectively blacklisted in film circles and unable to produce a movie for several
years. (6/10RT:129-133, 138, 142; 6/11RT:33; 6/12RT:57, 71, 172; 6/16RT:113;
6/17RT:138, 130-161; SER:269-270, 273-274, 278-279.)
After an eight day trial, the jury returned a verdict for Plaintiff and against
Defendants on all claims, as follows:
• breach of contract and breach of the covenant of good faith and fair
dealing, against Sonja Productions - as the contracting party - and
Sonja Morgan, individually, as the alter ego of Sonja Productions
(6/19RT:30-33);
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• negligent misrepresentation and fraud, against Sonja Morgan
individually, and against Sonja Productions (6/19RT:33-38.)
• Sonja Morgan engaged in her fraudulent conduct by clear and
convincing evidence (6/19RT:39);
• Hannibal Pictures’ compensatory damages are $6,816,294.
(6/19RT:30-39.)
After evidence of Sonja Morgan’s financial condition was introduced, the
jury assessed $250,000 in punitive damages against her. (6/19RT:68.)
As detailed below, Defendants made post trial motions raising limited
issues. (6/19RT71-72.) The District Court struck the alter ego finding but
otherwise denied the motion.
STATEMENT OF FACTS
A. The Parties.
1. Plaintiff Hannibal Pictures - a successful, established producer
of films distributed worldwide and starring Oscar-winning
actors.
Plaintiff Hannibal Pictures, Inc., an established company specializing in
co-productions of motion pictures distributed worldwide (6/9RT:152-154) had
optioned the right to make an independent film called Fast Flash to Bang Time
(“Fast Flash”) and was shopping the project around. (SE:27-28, 118-123.) The
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script for Fast Flash was written by Peter Illiff, who is best known for his
screenplays for Point Break, Patriot Games and Varsity Blues. (6/10RT:8.) John
Travolta expressed interest in starring in the film, and Hannibal’s customary
lender Royal Bank of Scotland, with whom Hannibal had already made four
profitable films, had committed to lend the project $17 million budgeted for the
film. (6/10RT:12-15.)
Hannibal Pictures was founded in 1999 by Richard Rionda del Castro and
his wife, Patricia. The company finances, produces and distributes three to six
motion pictures per year with budgets ranging from three to twenty million dollars
($3,000,000-$20,000,000). (6/19RT:149-151.) Hannibal has carved out an
excellent reputation as a major player in the independent movie production
business. (6/9RT:151-154.) Hannibal’s movies have starred Oscar-winning actors
including Rod Steiger, Kevin Spacey, Gerard Depardieu, and Adrien Brody,
among others. (6/9RT:152-154, 6/9RT:19.) Every one of the films produced and
distributed by Hannibal has been profitable. (6/11RT:18.)
2. Defendant Sonja Morgan represents that she, her husband, and
her company has $25-50 million to produce up to five films.
Sonja Tremont-Morgan, then the wife of John Adams Morgan, an heir to the
J.P. Morgan banking empire, founded Sonja Productions. (6/12RT:172.) Morgan
named herself President and Chairman of Sonja Productions, and gave herself
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power of attorney to greenlight any project and/or package to go into production
for Sonja Productions. (SE:29-90; 6/16RT:21; SER:91-117.)
Ms. Morgan’s new company, Sonja Productions had a business plan to
package a slate of five pictures in the budget range of $25 million to $50 million
during the time frame of September 2005 to December 2007. (6/12RT:175,
SER:1-22.) Sonja Productions had several employees, including Silvio Sardi, who
held the title of managing director as executive in charge of production.
(6/12RT:176 -177.)
Although Sonja Productions was wholly owned by Ms. Morgan (SER:91-
117), the company had a Board of Directors, which included Morgan’s husband,
John Adams Morgan, whose profile also appeared on the website touting him as
an officer and vice president in charge of business and financing. (6/16RT:113.)
Sonja Productions announced its business plan on its website, drafted by
Mr. Sardi and approved by Ms. Morgan, stating: “Sonja Productions, established
August 2005, has cash funding to invest in 2006/2007 in five motion pictures in
the range of U.S. dollars 25 to 50 million.” (6/12RT:57, 71; SER:19.)
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B. Ms. Morgan Fraudulently Misrepresents Her Cash Funds On
Hand To The Independent Film Market, Lures Hannibal With
Her Misrepresentations Of Millions In Cash, And Induces
Hannibal To Agree To Allow Morgan To Fund The Production
Of Fast Flash.
Ms. Morgan attended the American Film Market (“AFM”) with Mr. Sardi to
meet with producers regarding potential projects. During this time, Sonja
Productions placed an ad in Variety magazine announcing that “Sonja
Productions, established in August 2005, has cash funding to invest in 2006, 2007
in five motion pictures in the range of $25 million to $50 million for each film.”
(6/11RT:27-29.) This ad included a listing of Sonja Production’s board of
directors including John Adams Morgan. (6/11RT:43.)
Around this time, Mr. Sardi introduced Ms. Morgan to attorney Donald
Barton (6/16RT:101), who subsequently became Sonja Productions’ lawyer
(6/12RT:94). During Barton’s initial meeting with Sonja Productions, Ms.
Morgan informed Mr. Barton that she was John Morgan’s wife and that she
wanted to produce a slate of movies over the next year or two and had $50 million
available and allocated to production. (6/16RT:104.) Mr. Barton testified that he
was present during meetings with Sonja Productions and various producers, and
that Ms. Morgan and Mr. Sardi told these producers that Sonja Productions had
cash to invest in projects and did not need to raise capital to fund projects.
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(6/16RT:116-117.)
Mr. Barton represented a number of producers, distributors, and writers.
(6/16RT:98.) Mr. Barton had represented Hannibal and was aware of the Fast
Flash screenplay, and thought it might be a good project for Sonja Pictures.
(6/16RT:115-116.) Sonja Morgan agreed and became interested in meeting with
Hannibal, so Mr. Barton set up a meeting between Hannibal and Sonja
Productions. (6/15RT:30-31, 6/16RT:67.)
Sonja Productions and Hannibal met on November 9, 2005 at Hannibal’s
offices. (6/11RT:32, 6/16RT:117.) The parties discussed Fast Flash and Ms.
Morgan introduced her company to Hannibal. (6/11RT:32.) Ms. Morgan
announced she had $50 million in a bank account, she loved Fast Flash, and she
wanted to produce the film with Hannibal. (6/11RT:33.)
After several discussions between Hannibal, Ms. Morgan, and the
employees of Sonja Productions, the parties entered into a deal memorandum (the
“Contract”) for the financing and production of Fast Flash. (6/18RT174.)
C. The Terms Of The Contract.
Under the Contract, Hannibal agreed to assign to Sonja Productions all its
rights, title, and interest in “Fast Flash to Bang Time,” and Sonja Productions
agreed to cash flow 100% of the approved production budget for the film,
estimated at $18,500,000.00, and to provide 60% of this amount, or
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$11,100,000.00, as equity in the project. (ER:160-166.)
Sonja Productions further agreed to pay Hannibal a producer fee of
$800,000, and to reimburse Hannibal’s prior expenses in the amount of
$52,094.00. (ER:163-164.) Hannibal would act as the exclusive international
sales agent for the film, with a fee equal to 20% of gross receipts based on a
$200,000.00 marketing budget; and Hannibal Pictures and Sonja Productions
would jointly act as sales agents for the United States, with Hannibal Pictures
receiving a fee between 6% and 12% of the sales. (ER:163-165.) Hannibal
Pictures would receive screen credit on the film and 20% of worldwide profits,
with Sonja Productions receiving 80%. (ER:165.)
D. Hannibal Satisfies Its Primary Obligation To Secure John
Travolta’s Written Confirmation To Star In The Film.
One significant condition precedent to the Contract was written
confirmation that John Travolta would be attached to the project as the male lead.
(6/18RT:174.) The Contract provided that it would be voidable if such
confirmation was not received by January 31, 2006. (ER:162.)
Hannibal Pictures informed Sonja Productions in approximately early
December 2006 that a deal with Mr. Travolta was done, subject to approval of the
female co-star and the start date. (6/10RT:83-84.) Hannibal Pictures worked
diligently to obtain approval from Mr. Travolta for a start date and for Ms.
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Morgan’s preferred co-star, Rosario Dawson. (SER:244-256.)
On January 25, 2006, Hannibal and Sonja Productions executed a written
amendment to the Contract (“the Amendment”) extending the date for
confirmation of Mr. Travolta as male lead to February 28, 2006. (6/18RT174-175;
ER:160.) Under the Amendment Sonja Productions would immediately pay
Hannibal Pictures the reimbursement amount of $52,094. (ER:160.)
On January 27, 2006, Mr. Travolta, acting through his duly authorized
representative, confirmed his participation in the film, his approval of Rossario
Dawson as co-star, and his approval of a start date in March 2006. (ER:158.)
The project was also progressing rapidly in areas additional to casting.
Numerous visits to the production location, Florida, had resulted in meetings with
the local legislature and approval of the production of the film in Florida as well as
preapproval of the state tax rebate. (6/9RT:165, 6/10RT:141.) And, even though
production had yet to begin on Fast Flash, Hannibal had already presold the
licensing of the film to various territories around the world for the sum of Six
Million Seven Hundred Seventy Six Thousand Dollars ($6,776.000). (SER:153-
243, 259-267, 282-299.)
Further, Hannibal had secured a completion bond from International Film
Guarantors (“IFG”), a Fireman’s Fund subsidiary, which guaranteed to the film’s
producer and any financier or lender on the film, that the film would be delivered.
(6/10RT:36.) Hannibal duly and timely delivered this completion bond and all
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other documents required under the Contract to Sonja Productions. (6/10RT:36-
38.)
Because of the imminent start date, and the immediate need to start paying
under Mr. Travolta’s pay-or-play agreement, it became critical that Sonja
Productions begin financing as provided by the Contract, so that the project could
move forward. (ER155-156.)
E. Morgan Breaches The Contract And Fails To Provide The
Required Proof Of Funds.
On January 31, 2006, Hannibal’s CEO Richard Rionda del Castro and
Patricia del Castro met with Ms. Morgan and Silvio Sardi in Los Angeles. (See
Exhibit 183.) Ms. Morgan told Mr. Rionda and others that all funds necessary to
finance the project were located at City National Bank and would be ready to be
transferred to a film production account in a couple days. (SER: 280-281.) Ms.
Morgan also stated that Sonja Productions would provide proof of funds the next
morning, February 1, 2006, and would immediately begin cash flowing to the
picture by depositing monies into an escrow account for John Travolta’s services.
(SER:280-281.) Furthermore, Ms. Morgan stated that Sonja Productions had
already issued and mailed Hannibal the promised reimbursement check for
$52,094. (SER:280-281.)
Despite Ms. Morgan’s representations, no proof of funds was ever provided
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to Hannibal or to John Travolta’s representatives as promised. On February 1 and
2, 2006, Hannibal and attorney Donald Barton (Sonja Productions’ attorney) made
numerous attempts to contact Sonja Productions to obtain proof of funds.
(SER:269-270, 273-275, 278-279.) During the same period, Mr. Travolta’s
representatives repeatedly requested the proof of funds from Hannibal and insisted
that an amount equal to Mr. Travolta’s fixed compensation for the picture be
placed in escrow in order to sign the negotiated agreement with Mr. Travolta.
(SER:271, 275-277.) In reliance on promises from Ms. Morgan and Sonja
Productions, Hannibal repeatedly assured Mr. Travolta’s representatives that the
proof of funds and escrow monies would be forthcoming imminently. (SER:268,
272.)
On or about February 3, 2006, Ms. Morgan informed Hannibal that Sonja
Productions would not provide any funding at all for the film. Ms. Morgan also
stated, contrary to her prior representations, that there were no funds available to
finance the project. (6/10RT:129-130.) Morgan’s sudden failures and Travolta’s
withdrawal left Hannibal with no time or opportunity to salvage the production of
Fast Flash. (6/10RT:130-133,142.)
On February 6, 2006, Hannibal received the $52,094 reimbursement check
issued by Morgan and deposited the check. (SER:23-26, 257-258.) However,
Sonja Productions stopped payment on the check. (6/18RT:175.)
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F. The Collapse Of The Film Production Causes Hannibal
Significant Damages.
Plaintiff’s expert, Lawrence P. Mortorff, a 1973 graduate of UCLA law
school, has had extensive experience in the entertainment industry with a
well-known talent agency and respected film and television production companies.
(6/17RT:101-103.) Mr. Mortorff has been involved as a producer in over
thirty-five motion pictures and has written a treatise on entertainment law.
(6/17RT:104-105.)
Mr. Mortorff emphasized that Hannibal had already “gone a long way
towards entering into [presales] agreements” by the time Defendants unilaterally
withdrew their support of Fast Flash. (6/17RT:131.) Mr. Mortorff highlighted
that it is custom and practice for producers to obtain foreign presales by having
producers “go to their buyers in their territories and try to enter into a [presale]
contract for the sale or license of rights” to a movie that has yet to be produced.
(6/17RT:114.) And in order for the buyers to value the yet to be produced movie,
the buyers will consider the elements attached, i.e., “actor, director, producer,
[and] budget.” (6/17RT:114.) Buyers also value yet to be produced movies based
upon information provided by the producers in the form of worldwide sales
projections. (Id.)
Hannibal prepared worldwide sales projections for Fast Flash based on the
following elements attached to the film: John Travolta (actor), Peter W. Illif
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(director), Hannibal Pictures (producer), and an $18.5 million cash budget, as well
as years of expertise as a film producer. (6/10RT:18-24; SER:282-299.) As is
typical in the entertainment industry, the worldwide sales projections contained
projections for both “ask” and “take” sales figures. (6/17RT:115.) Mr. Mortorff
explained that “[m]ost foreign sales agents [or producers] are fairly experienced,
know their buyers, and know that if the picture costs $18 million it’s worth 3
percent in Spain or 6 percent in France.” (6/17RT:115.) Based upon their
experience with the markets, producers will then “establish what they are going to
ask the buyer to pay versus the take price.” (6/17RT:115.)
By way of example, Mr. Mortorff analogized “ask” versus “take” price to
the jury by looking at a real estate transaction where an individual might ask to
sell a home at a higher price then what the individual might ultimately take to sell
the home. (6/17RT:115.) Hannibal Pictures had already secured presales for Fast
Flash at prices above the take prices estimated in the worldwide sales projections.
(6/17RT:131-132; SER:153-243, 259-267.)
The damages assessment presented to the jury in the form of Mr. Mortorff’s
testimony was based on the much more conservative “take” price. (6/17RT:131-
133.) This conservative assessment of damages was presented despite the
evidence that Hannibal had already obtained presales that outperformed the
worldwide sales projections for the “take” price. The “take” price for worldwide
sales projections for Fast Flash was $15.3 million for international sales and $10
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million for domestic sales, totaling approximately $25.3 million in sales.
(6/17RT132; SER:282-299.)
Based upon the conservative “take” price sales projections of $25.3 million,
Mr. Mortorff went through the calculations demonstrating how Hannibal Pictures
would have earned approximately Six Million Eight Hundred Thousand Dollars
($6,800,000) had Fast Flash been produced. (SER:177; 6/17RT:131-161.)
Mr. Mortorff’s calculations were based on hard damages, non-speculative
numbers based on the contract language and agreements for domestic and foreign
presales. (6/17RT:130-161.) Mr. Mortorff opined that a movie with a star like
John Travolta attached would easily be able to garner $10 million for a U.S.
distribution deal. (6/17RT:148.) Under even the most conservative of estimates,
Fast Flash would have generated at least $25 million in worldwide sales, of which
Hannibal Pictures would be entitled to approximately $7 million.
(6/17RT:152-153.) Hannibal had already secured over six million dollars in
foreign pre-sales. (SER:124-176, 187-243, 259-267, 282-299.)
Mr. Mortorff testified extensively that despite a general understanding that
there would be less foreign sales without a domestic (U.S.) distribution agreement
in place:
…with a star like John Travolta, in this case in particular, the take
price is territory by territory proven up by the sales agent Hannibal
Pictures. And a buyer to get the John Travolta picture probably
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wouldn’t necessarily require you to have a U.S. distributor. They
would probably assume you would have one. And with a John
Travolta picture, at some point you would have a U.S. distributor.
You would never go undistributed on the picture.
(6/17RT:158.)
The following summarizes the undisputed testimony of Mr. Mortorff’s
calculations of the damages based on the terms of the contract:
1. $3.1 million: Hannibal Pictures was entitled to a 20 percent
commission for all international sales ($15.3 million). (6/17RT:132; SER:177-
186.)
2. $20,000: Hannibal Pictures was entitled to 20 percent of an ancillary
figure ($100,000). (Id.)
3. $600,000: Hannibal Pictures was entitled to a 6 percent commission
for domestic sales ($10 million). (6/17RT:132-133; SER:177-186.)
4. $200,000: Hannibal Pictures was owed marketing expenses
($200,000). (6/17RT:134; SER:177-186.)
5. $666,000: Hannibal Pictures was owed a cash tax rebate of 15
percent for the amount of the production budget that would have been spent in
Florida ($11.1 million). (6/17RT:134-135; SER:177-186.)
6. $800,000: Hannibal Pictures was owed a producer’s fee ($800,000).
(6/17RT:135; SER:177-186.)
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2“Every assertion in briefs regarding matters in the record shall be supportedby a reference to the location in the excerpts of record where the matter is to befound.” Circuit Rule 28-2.8; N/S Corp. v. Liberty Mut. Ins. Co., 127 F.3d 1145,1146-1147 (9th Cir. 1997). The failure to provide proper citations to the record inthe brief is sanctionable, including dismissal of the appeal. See Circuit Rule 28-2,Adv.Comm. Note; N/S Corp. v. Liberty Mut. Ins. Co., supra, 127 F.3d at 1146.
17
7. $1.2 million: Hannibal Pictures was entitled lost recoupment of
unspent funds from the film’s budget, costs and expenses were paid ($2-$3
million). (6/17RT:136; SER:177-186.)
Ms. Morgan admitted that based on the sales projections for Fast Flash, the
film was likely to be a great success and generate millions of net profit and
producer fees to her and her company. (6/12RT:104-105.)
APPELLEE’S REBUTTAL TO DEFENDANTS’ STATEMENT
OF CASE AND STATEMENT OF FACTS
Throughout its brief, Defendants make statements that are either not
supported by the record or which are contradicted by other evidence. Since the
evidence must be reviewed in the light most favorable to the judgment,
Defendants’ slanted and unsupported presentation of the facts is improper and, at
minimum, should be stricken.2
Below Plaintiff highlights a few of Defendants’ factual
mischaracterizations:
1. Defendants’ Opening Brief: “This is case about one of the many
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countless failed movie projects in Hollywood.” (AOB2.) Defendants’ attempt to
cast this case as just another typical pie-in-the-sky dream of starry-eyed wannabe
movie producers was contradicted by the evidence, was rejected by the jury, and
should be soundly rejected again on appeal.
In truth, this movie production - which had received firm, written
commitments from both John Travolta and his co-star Rosario Dawson, had
quickly generated pre-sales of over $6 million, and had received a $6 million loan
commitment from the Royal Bank of Scotland towards production - failed because
of Ms. Morgan’s lies that she and her husband (a J.P. Morgan heir) were able to
fund the picture with their own money, when in truth Ms. Morgan did not have the
money. (6/10RT:130-133.)
2. Defendants’ Opening Brief: “Hannibal Pictures, Inc. (“Hannibal
Pictures”) [is] a small Hollywood production company with few credits to its
name. . . .” (AOB3.)
In truth, since 1999, Hannibal has been involved in major independent
movie production starring world-famous and Oscar-winning actors, with
international distribution, and has carved out an excellent reputation as a major
player in the independent movie production business. (6/9RT:151-154.)
Hannibal’s movies have starred Kevin Spacey, Gerard Depardieu, Adrien Brody
and Rod Steiger, among others. (6/9RT:152-154, 6/11RT:19.)
3. Defendants’ Opening Brief: “Fast Flash to Bang Time (“Fast
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Flash”) [was] a feature film potentially starring John Travolta.” (AOB3.)
Throughout Defendants’ Brief, reference is made that John Travolta was
merely a “potential” star of the film, that he did not commit to the film, and that
when Ms. Morgan purportedly “learned” Travolta would not be involved, she
withdrew her participation in the film. In truth, as numerous witnesses testified
(including Ms. Morgan’s own film manager Sardi), John Travolta’s attorney had
given written confirmation of Travolta’s commitment to do the film. Travolta’s
lawyer Mike Ossi sent Hannibal written confirmation (Ex. 156.) Several witnesses
including Ms. Morgan’s own manager Sardi confirmed it was the custom and
practice in the film industry for written confirmation to come from the star’s
agents and/or attorneys, not from the star himself. (6/17RT:81, 6/17RT:124.)
4. Defendants’ Opening Brief: Ms. Morgan’s previous film was
“critically acclaimed but a commercial failure.” (AOB3.)
In truth, the relevance to Plaintiff of Ms. Morgan’s first film, The Marsh,
starring Forrest Whittaker, is that it was just another piece of Ms. Morgan’s fraud
to induce Plaintiff’s reliance on her representations that she had immediate cash
available to produce films. (6/10RT: 33-34.)
5. Defendants’ Opening Brief: Before the film got off the ground,
Defendants “withdrew from the agreement in large part because of Hannibal
Productions’ business practices” and because Ms. Morgan “was and is in the
middle of a highly contentious divorce including a custody battle over her young
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daughter.” (AOB3.)
In truth, Defendants withdrew because her lies about her funding were
exposed - she simply could not come up with the funds to which she had
promised Hannibal (and indeed the rest of the film production world) she had free
access.
Mr. Barton, one of Ms. Morgan’s lawyers, testified that he was told by Ms.
Morgan she had $50 million to fund movies, that J.P. Morgan Bank was behind
her, that she had the backing of her husband John Adams Morgan, and that had
Barton known that there was no money, he would have ceased work on the project
because he knew that his credibility was on the line. (6/16RT:177,190,194,196.)
Kelsey Howard, an independent film producer, testified he was also told by
Ms. Morgan that she and her husband had $50 million to spend on movies and that
“money is not an issue.” (6/12RT:14-15.)
Mr. Rionda testified extensively that Ms. Morgan told him money was not a
problem for the Morgans, that they had $50 million to spend on film productions.
(6/10RT:2.)
Ms. Morgan herself admitted that she never told her attorney Mr. Barton
that she did not have money available and instead had to raise the money to invest
in the film. (6/15RT:94.)
Ms. Morgan’s website for Sonja Productions also falsely represented that it
had “$50 million in cash funding” to invest in film productions and that her
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husband John Adams Morgan was an officer and vice president in charge of
business and financing.
6. Defendants’ Opening Brief: “Hannibal Productions did not secure
any investors after Sonja Productions withdrew and the film was never made.”
(AOB3.)
In truth, as the jury concluded from the evidence, once Defendants’
promises were exposed, Defendants failed to deliver proof of funds to John
Travolta as promised, and the film lost its ability to cast Travolta as its star
because of his tight filming schedule, Hannibal had no time to salvage the project.
(6/10RT:121-122,142.)
7. Defendants’ Opening Brief: “Sonja Productions’ business plan was
to . . . find outside investors to raise between $25 million and $50 million to
finance and produce those films.” (AOB9.)
But this is not what Ms. Morgan told Hannibal. She did not disclose that
she had to raise the money from outside investors. Her manager Silvio Sardi
contradicted Ms. Morgan’s testimony and testified the money simply was never
there. (6/11RT:58.) Every other witness, including independent witnesses like
Kelsey Howard, testified they were never given the business plan, and were never
told Ms. Morgan had to raise the money from the outside. (6/11RT:75,
6/12RT:15.) To the contrary, Ms. Morgan consistently told all parties, that she
had the cash at hand and was ready to do the deal. (Ibid.)
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8. Defendants’ Opening Brief: “And when it became clear to Hannibal
Productions that Sonja Productions did not have $6,000,000 lying around,
Hannibal Productions’ CEO Richard Rionda del Castro suggested that Sonja
Productions falsify documentation that could be shown to Mr. Travolta as
evidence that Sonja Productions could provide Mr. Travolta’s salary with cash on
hand. Id. at 128:22-129:10. At that same meeting, Mr. Rionda tried to pressure
Sonja Productions into producing an unrelated independent film titled Chasing
the Dragon. Mr. Rionda even suggested that Sonja Productions could use the
same falsified proof of funds for both Mr. Travolta and Chasing the Dragon, and
he acknowledged that he falsely represented to prospective investors for Chasing
the Dragon that Sonja Productions had several million dollars on hand.”
(AOB16-17.)
To the extent Ms. Morgan’s assertions are unsupported by any record
citations they should be disregarded. The one record citation does not support
Morgan’s assertions and should also be disregarded.
In truth, the evidence showed that when Ms. Morgan claimed she didn’t
have $5.8 million in one account but had that amount in various accounts, Ms.
Morgan was told that it was sufficient to show proof of funds from more than one
account. (6/17RT:178; SER:273.) Mr. Rionda emphatically denied ever asking
Morgan to falsify documents, and Mr. Sardi admitted Mr. Barton also never made
such a request. (6/10RT:121-122; 6/11RT:115.) Instead, as Ms. Morgan’s own
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manager Mr. Sardi testified, the plain fact is that Ms. Morgan’s false promises
were exposed: “I think she has two faces. She was excited up front to them
[Hannibal] because the deal was done and then the other side she was stressed
because now she knows she didn’t have the money at this time.” (6/11RT:195.)
SUMMARY OF THE ARGUMENT
Defendants ask this Court to reverse the District Court’s orders denying
their post-verdict motions for judgment as a matter of law (Rule 50(b) motions) on
the grounds that (1) the economic loss rule precluded Plaintiff from recovering in
tort, and (2) the damages relating to lost profits are excessive. However, because
neither of these issues were raised in a prior Rule 50(a) motion, they have not been
preserved on appeal. Defendants are therefore precluded from seeking reversal of
the District Court’s denial of their motions for judgment as a matter of law.
Furthermore, as explained below, the economic loss rule would not bar
recovery in tort here. As concluded by the District Court, Defendants’ fraudulent
representations were not simply reiterations of the obligations in the contract but
rather affirmative misrepresentations intended to deceive Hannibal.
Defendants’ alternative request that this Court “reverse the district court’s
denial of the motion for new trial or remittitur, hold that the jury’s damages award
was excessive as a matter of law, and thus require Hannibal Pictures to accept the
reduced award or to submit to a new trial,” similarly fails. (AOB56.) Notably,
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Defendants’ motion for new trial was brought on the sole ground that the damages
are excessive. Thus, Defendants have not preserved the right, and have not
requested, a new trial as to the economic-loss-rule issue.
With respect to the excessive damages issue, a district court’s denial of a
motion for new trial will not be overturned absent a clear abuse of discretion – i.e.,
“only where there is an absolute absence of evidence to support the jury's verdict.”
Desrosiers v. Flight Int'l of Florida Inc., 156 F.3d 952, 957 (9th Cir. 1998)
(emphasis added). As set forth in detail below, Defendants have patently failed to
meet this high burden. As such, no new trial is warranted and the District Court’s
order should be affirmed.
ARGUMENT
I. DEFENDANTS’ FAILURE TO COMPLY WITH FEDERAL RULE
OF CIVIL PROCEDURE 50(a), FORFEITS THEIR REQUEST THAT
THIS COURT REVERSE THE DISTRICT COURT’S DENIAL OF
THE RENEWED MOTIONS FOR JUDGMENT AS A MATTER OF
LAW
Defendants ask this Court to reverse the District Court’s denial of their post-
verdict motion for judgment as a matter of law filed pursuant to Federal Rule of
Civil Procedure, Rule 50(b) and enter judgment in their favor due to (1) the
economic loss rule and (2) the supposed absence of evidence supporting the jury’s
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damage award. (AOB56.) The first fatal flaw with Defendants’ requested relief
however is that Defendants’ failed to preserve these issues on appeal.
Defendant Sonja Morgan brought a Rule 50(a) motion on only one ground,
i.e., that there was insufficient evidence to support a finding of alter ego.
(6/17RT:164.) This Motion was later renewed under Rule 50(b) and granted by
the District Court judge (and is thus obviously not being challenged by Defendants
on appeal).
After the verdict had been reached, Defendants Sonja Productions and Sonja
Morgan brought Rule 50(b) Motions on several other grounds, including that
Plaintiff’s negligent misrepresentation and fraud claims fail under the economic
loss rule and that the damages awarded were improper because Plaintiff “failed to
offer any evidence that the movie would have been made but/for the lack of
funding by” Defendants. (CD179:20.) These issues were never previously raised
in a Rule 50(a) motion.
The scope and propriety of a Rule 50(b) motion is controlled by Rule 50(a).
Rule 50(a) permits a party to move for judgment as a matter of law after the
opposing party has been fully heard and prior to the submission of the case to the
jury. Fed.R.Civ.P. 50(a)(1). If a Rule 50(a) motion is denied, Rule 50(b) allows
the moving party to “renew” its motion within ten days after the court's entry of
final judgment in the case. Fed.R.Civ.P. 50(b). “A party cannot raise arguments
in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did
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not raise in its pre-verdict Rule 50(a) motion.” Freund v. Nycomed Amersham,
347 F.3d 752, 761 (9th Cir.2003). The moving party is limited to the “specific
grounds” raised in the pre-verdict motion. Wallace v. City of San Diego, 479 F.3d
616, 620 (9th Cir. 2007).
The failure to raise arguments addressed in a party’s post-trial motion for
judgment as a matter of law under Rule 50(b), in a previous pre-verdict Rule 50(a)
motion, results in “a complete waiver, precluding our consideration of the merits
of the issue.” Wei Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1028-29 (9th
Cir. 2003).
This is particularly true with regard to challenges on the grounds of
sufficiency of the evidence. To preserve the right to appellate review on the
ground of insufficient evidence, a party ordinarily must make a motion for
judgment as a matter of law in the trial court. Zhang v. American Gem Seafoods,
Inc., 339 F3d 1020, 1028-1029 (9th Cir. 2003); Yeti by Molly, Ltd. v. Deckers
Outdoor Corp., 259 F3d 1101, 1109 (9th Cir. 2001). Appellate courts will thus
not review a district court denial of a judgment as a matter of law motion based on
insufficiency of the evidence unless appellant made the motion at the close of all
the evidence and before the matter was submitted to the jury pursuant to FRCP
50(a), and then renewed it after the verdict pursuant to FRCP 50(b). Nitco
Holding Corp. v. Boujikian, 491 F.3d 1086, 1089 (9th Cir. 2007); Wallace v. City
of San Diego, 479 F.3d 616, 631 (9th Cir. 2007) [issue not preserved for appeal
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3While Defendants alternatively seek reversal of the District Court’s denialof their Rule 59 New Trial Motion (AOB56), it should be noted that Defendants’new trial motion was solely on the grounds of substantial evidence to support theaward of lost profit damages and did not include the argument now raisedconcerning the application of the economic loss rule. Therefore, Defendants havewaived even the right to seek a new trial based on their economic loss ruleargument.
27
where renewed Rule 50(b) motion for JMOL not preceded by Rule 50(a) motion
setting forth specific grounds raised on renewed motion.].
Where a party has failed to properly preserve a challenge to sufficiency of
the evidence, the issue is forfeited. The court will not review the matter even for
“plain error” apparent on the face of the record. Nitco Holding Corp. v. Boujikian,
supra, 491 F.3d at 1089-1090 (9th Cir. 2007) (overruling prior conflicting Ninth
Circuit cases).
Here, as the issues concerning Plaintiff’s right to recover in tort and whether
substantial evidence exists to support the lost profit damages award were not
raised in a Rule 50(a) motion, they have not been preserved on appeal.3
Defendants are therefore precluded from seeking reversal of the District Court’s
denial of their motions for judgment as a matter of law.
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II. EVEN IF THE ISSUE HAD NOT BEEN WAIVED BY DEFENDANTS,
THE ECONOMIC LOSS RULE DOES NOT EXTEND TO BAR
HANNIBAL’S FRAUD BASED CLAIMS
Defendants argue that Hannibal’s fraud and misrepresentation claims are no
more than a restatement of the breach of contract claims and thus barred by the
economic loss rule. (AOB20-33.) Defendants ignore the context of the fraudulent
misconduct in this case as outlined by the District Court and simply reiterate the
principle that a party may not ordinarily recover in tort for the breach of
contractual duties. While Defendants criticize the District Court’s ruling denying
their Rule 50(b) motion on this ground, arguing that the District Court blindly held
that the economic loss rule did not apply simply because the tort claims concerned
fraud and misrepresentation, Defendants completely overlook the District Court’s
detailed ruling outlining the evidence of extra-contractual breaches presented to
the jury.
Furthermore, Defendants’ emphasis on the harm caused by the fraudulent
conduct as being purely economic and therefore absolutely barred by the economic
loss rule is misplaced. The California Supreme Court has expressly rejected
barring tort recovery simply because the Defendant’s intentional breach of a duty
imposed by law caused purely monetary harm to the Plaintiff.
The District Court’s ruling denying Defendants’ request to limit Hannibal’s
damages to only those in contract should thus be affirmed.
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A. The Evolution Of The Economic Loss Rule.
The economic loss rule originated in products liability cases where the
product purchasers brought claims because their expectations were frustrated
when the product did not work properly. In this setting the Courts held that the
purchaser’s remedy is in contract alone, for he has suffered only economic losses.
See Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988-989.
As explained by the Robinson Court, the function of the economic loss rule
is to prevent tort law from shifting back to sellers a specific risk that better rests
with buyers-the risk that a product will not perform to a particular level beyond
that warranted by the seller. Id. at 997-998.
While the economic loss rule first arose in product liability cases, it has
since also been given limited application outside of that setting. Thus, in Aas v.
Superior Court, 24 Cal.4th 627, 642-643 (2000), the Court applied the economic
loss rule to preclude recovery of tort damages in the context of a case where the
Plaintiff claimed that the Defendant negligently failed to perform a contract to
construct a home. See Robinson, at pp. 990-991. But, in reaching this conclusion,
the Court emphasized that “conduct amounting to a breach of conduct becomes
tortious when it also violates a duty independent of the contract arising from
principles of tort law.” Aas, at p. 643. Thus, in Robinson, the Court explained:
“Tort damages have been permitted in contract cases where a breach
of duty directly causes physical injury [citation]; for breach of the
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covenant of good faith and fair dealing in insurance contracts
[citation]; for wrongful discharge in violation of fundamental public
policy [citation]; or where the contract was fraudulently induced.
[Citation.]” [Citation] “[I]n each of these cases, the duty that gives
rise to tort liability is either completely independent of the
contract or arises from conduct which is both intentional and
intended to harm. [Citation.]” [Citations]
The Court elaborated: “Focusing on intentional conduct gives
substance to the proposition that a breach of contract is tortious
only when some independent duty arising from tort law is
violated. [Citation.] If every negligent breach of a contract gives rise
to tort damages the limitation would be meaningless, as would the
statutory distinction between tort and contract remedies.” [Citation]
Robinson, at pp. 989-990 (emphasis added).
Accordingly, the Supreme Court held that the “economic loss rule is
designed to limit liability in commercial activities that negligently or inadvertently
go awry, not to reward malefactors who affirmatively misrepresent and put people
at risk.” Robinson, at p. 991.
Because of the extra measure of blameworthiness inhering in fraud,
and because in fraud cases we are not concerned about the need for
‘predictability about the cost of contractual relationships’ [citation],
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fraud plaintiffs may recover ‘out-of-pocket’ damages in addition to
benefit-of-the bargain damages.” [Citation] In addition, “California
also has a legitimate and compelling interest in preserving a business
climate free of fraud and deceptive practices.” [Citation] Needless to
say, Dana’s fraudulent conduct cannot be considered a “‘socially
useful business practice[ ].’” [Citation] As one court stated, “Simply
put, a contract is not a license allowing one party to cheat or defraud
the other.” [Citation]
Robinson, at pp. 991-992.
Therefore, in California, the economic loss doctrine bars recovery in tort for
purely monetary harm in product liability and negligence cases. While some
courts have further extended the rule to bar recovery for other tort claims, it is only
where the Plaintiff’s claim is that the Defendant failed to perform what was
promised in the contract. Obligations breached by a Defendant outside of the
contract are not barred by the economic loss rule as they do not concern mere
restatements of contractual breaches.
Further, and contrary to Defendants’ claim, there is no support for the
extension of the doctrine to bar recovery in tort where the Defendant had a duty
imposed by law (tort duty) rather than by contract and where the Defendant’s
intentional breach of that duty caused purely monetary harm to the Plaintiff.
Giles v. General Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007) is
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4While Giles interpreted Nevada law, the Court highlighted the similarity ofNevada law to California law. See Giles, at p. 877 [“The leading Nevada case onthe economic loss doctrine is Calloway v. City of Reno, 116 Nev. 250, 993 P.2d1259 (Nev. 2000). Calloway is conceptually similar to Seely, the paradigmaticproduct liability case decided by the California Supreme Court thirty-five yearsearlier.”]
32
on point.4 In Giles, this Court explained that while ‘the economic loss doctrine
has not been confined to product liability cases. When applied in cases outside the
product liability context, the doctrine has produced difficulty and confusion. In
such cases, as lamented by the Florida Supreme Court, “the [economic loss] rule
has been stated with ease but applied with great difficulty.’ [citation omitted.]” Id.
p. 874.
One reason for the difficulty is that many courts have stated in overly
broad terms that purely economic losses cannot be recovered in tort.
[Citations]
Such broad statements are not accurate. Tort law has
traditionally protected individuals from a host of wrongs that
cause only monetary damage. As the Utah Supreme Court has
noted, “torts such as fraud and conversion exist to remedy purely
economic losses.” Grynberg v. Questar Pipeline Co., 2003 UT 8, 70
P.3d 1, 11, 13 (Utah 2003) (emphasis added). Many courts have
explicitly refused to extend the economic loss doctrine beyond the
product liability context or beyond claims for negligence and strict
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liability. [citations omitted]
Giles, at pp. 874-877, emphasis added.
Thus, this Court explained that “Most courts that have applied the economic
loss doctrine beyond product liability cases have done so to bar recovery of
economic loss in negligence and strict liability. [citations omitted]” Id. The Court
noted that while some courts have applied the economic loss doctrine to bar
recovery on tort claims beyond negligence and strict liability, “they have usually
amounted to nothing more than a failure to perform a promise contained in a
contract.” Id.
Giles accordingly makes clear that the economic loss analysis does not
focus solely on the harm alleged by reason of the tortious conduct, but rather
whether the tortious conduct involves nothing more than a breach of the
contractual obligations. Once it is established that the tort is outside of the
contract, the analysis ends and the economic loss doctrine does not apply. Accord
County of Santa Clara v. Atlantic Richfield Co. 137 Cal.App.4th 292, 328-329
(2006) [the first prong of the analysis is whether the tortuous conduct arose from a
duty independent of the contract].
Therefore, as summarized by Giles, the economic loss rule “does not bar
recovery in tort where the Defendant had a duty imposed by law rather than by
contract and where the Defendant’s intentional breach of that duty caused purely
monetary harm to the plaintiff.” Giles, at p. 879 fn. 5. As now explained, when
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these principles are applied here, it is evident that Defendants fall short of
undermining the judgment under the economic loss rule.
B. The District Court Properly Rejected Defendants’ Contention
That The Economic Loss Rule Applied To Bar Hannibal From
Recovering In Tort.
(i.) As Aptly Concluded By The District Court, Defendants’
Fraudulent Conduct Was Extraneous To The Contract And
Thus Not Barred By The Economic Loss Rule.
As is clear from its order denying Defendants’ Rule 50(b) motion, the
District Court analyzed whether Defendants’ fraudulent conduct inducing
Hannibal to enter into the contract constituted conduct violating an independent
duty outside of the contract. The District Court properly concluded that
Defendants’ fraudulent conduct was extraneous to the contract and thus not barred
by the economic loss rule.
Defendants argue that “[b]ecause courts are required to analyze each
Plaintiff’s tort claim on its own terms, the district court misapplied California law
when it failed to analyze whether Sonja Productions or Ms. Tremont’s allegedly
tortuous conduct violated a tort duty independent of the contract.” (AOB25.)
Defendants’ position is puzzling as the District Court did precisely that.
(ER:12-13.) The District Court noted that the testimony and evidence presented at
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trial supported the jury’s finding that Ms. Morgan and Sonja Productions, LLC
committed fraud and made material misrepresentations inducing Hannibal to enter
the contract. (ER:12-13.) In fact, the District Court thoroughly detailed the
misconduct of Defendants giving rise to tort liability. (ER:12-13.)
The District Court explained that Hannibal based its tort claims on, inter
alia:
(1) Mrs Morgan personally reviewed and approved the language on
Sonja Production, LLC’s website, which stated: “Sonja Productions
established August 2005, has cash funding to invest in 2006/2007 in
5 motion pictures in the range of USD $20,000,000 to $50,000,000
for each film.” (SER:19);
(2) Richard Rionda testified that he read the website and understood
that Sonja Productions LLC was “extremely well capitalized ...[and]
[i]t has cash available immediately for five motion pictures (6/10RT:
29);
(3) Richard Rionda testified that Sonja Productions, LLC’s website
stated that John Adams Morgan was the “vice president in charge of
financing and banking” and Sonja Productions, LLC shared an office
with Mr. Morgan’s company (6/9RT:150; SER:1-22);
(4) Donald Barton, Plaintiff’s attorney, testified that he was told at a
meeting with Ms. Morgan that she had “50 million [dollars] allocated
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for the production of movies” (6/9RT:104);
(5) Richard Rionda testified that Donald Barton told him that Ms.
Morgan had “unlimited funding available...[a]nd that she had case,
$50 million.” (6/10RT:25);
(6) Richard Rionda testified that at a November 9, 2005 meeting with
Ms. Morgan, she stated that “she had $50 million on [sic] the bank
account at City National Bank in Beverly Hills...and she wanted to
could [sic] produce the film and finance the film” and also stated
“that money was never an issue; that she had immediate cash
available; that it would be available in 48 hours” (6/10RT:32-34); and
(7) Silvio Sardi, managing director of Sonja Productions, LLC,
testified “[w]hen we were with [Plaintiff], obviously we would not
bring out the situation that we don’t have the money because we
cannot say to him we sign the deal and we don’t have the money”
(6/11RT:56-57).
These fraudulent representations were not simply reiterations of the
obligations in the contract but rather affirmative misrepresentations intended
to deceive Hannibal.
Where, as here, a party engaged in fraudulent conduct, the Plaintiff is not
limited to suing on the contract. California law is clear: “An action for
promissory fraud may lie where a defendant fraudulently induces the plaintiff to
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enter into a contract.” Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996); see
also StreamCast Networks, Inc. v. IBIS LLC, No. CV 05-04239, 2006 WL
5720345, at *10 (C.D. Cal. May 2, 2006) (“One circumstance in which courts have
routinely recognized the availability of both a fraud and a contract action is a case
in which a party contends that it was fraudulently induced to enter into a
contract.”)
In Lazar, the California Supreme Court addressed the defendant’s argument
that tort and contract remedies should be kept separate, and held that “fraudulent
inducement of contract-as the very phrase suggests-is not a context where the
traditional separation of tort and contract law obtains.” Lazar, 12 Cal.4th at 645
(internal citation and quotation marks omitted). “[P]laintiff’s claim [for fraudulent
inducement] does not depend upon whether the defendant’s promise is ultimately
enforceable as a contract.” Id. at p. 638. Other California cases have made this
abundantly clear. Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979,
992 (2004) (“Simply put, a contract is not a license allowing one party to cheat or
defraud the other.”); Erlich v. Menezes, 21 Cal.4th 543, 551-552 (1999) (“Tort
damages have been permitted in contract cases where ... the contract was
fraudulently induced.”) (citing Las Palmas Assocs. v. Las Palmas Center Assocs.,
235 Cal.App.3d 1220, 1238-39 (1991); Walker v. Signal Cos., Inc., 84 Cal.App.3d
982, 996 (1978) (“[Punitive damages] may, however, [b]e awarded where a
defendant fraudulently induces the plaintiff to enter into a contract.”).
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Thus, contrary to Defendants’ characterization, the fraud claims were not
duplicative of the breach of contract claim. Here, the fraud claims relate to
misrepresentations in connection with entering into the contract, and not simply
misrepresentations relating to the performance of the contract’s terms.
Defendants’ position that Hannibal cannot recover under principles of tort
law simply because the fraudulent conduct was successful in inducing a signed
contract between the parties is ludicrous. Such a position is at odds with
California law recognizing the availability of both fraud and contract actions
where a plaintiff contends it was fraudulently induced to enter into a contract.
As explained in Las Palmas, “no public policy is served by permitting a
party who never intended to fulfill his obligations to fraudulently induce another
to enter into an agreement.” Las Palmas, supra, 235 Cal.App.3d at p. 1238; see
also Lazar, 12 Cal.4th at p. 646 (“Because of the extra measure of
blameworthiness inhering in fraud, and because in fraud cases we are not
concerned about the need for ‘predictability about the cost of contractual
relationships’ . . . , fraud plaintiffs may recover ‘out-of-pocket’ damages in
addition to benefit-of-the-bargain damages.”)
California courts have weighed the risk of allowing claims for fraudulent
inducement in a breach of contract action, and determined that the goal of
certainty in commercial settings is not served by immunizing tortfeasors from the
consequences of their intentional acts. Las Palmas, supra, 235 Cal.App.3d at pp.
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1238-39 (“Recognizing the adverse effect fraud has on commercial transactions,
the law permits a defrauded party to seek punishment of the wrongdoer through
the imposition of punitive damages.”)
To accept Defendants’ argument is to accept that, as long as a tortfeasor
convinces its victim to enter into a contract, liability is limited to contract
damages. But nothing in the cases cited by Defendants supports this outcome.
Defendants repeatedly mischaracterize the many authorities refusing to
apply the economic loss rule to bar recovery for intentional torts concerning
conduct outside of the contract, as applying some “categorical exception” for fraud
claims. (AOB24-28 [specifically the cases cited by Defendants in footnote 3, p.
27].) Defendants fail to appreciate that instead of blindly applying a “categorical
exception” to fraud or fraudulent inducement claims, the cases cited are in fact
applying the law and determining that the intentional torts claims are not mere
restatements of breaches of the contract. See Krzyzanowsky v. Orkin
Exterminating Co., Ins., No. C 07-05362 SBA, 2009 U.S. Dist. LEXIS 14332 ,
*31-34 (N.D. Cal. Feb. 24, 2009) [summary judgment denied: while the plaintiff
did not plead fraudulent inducement, the court noted that questions of fact existed
as to whether the defendant fraudulently induced the plaintiff to enter into the
contract and thus whether the defendant breached a duty outside of his contractual
obligations]; W. Emulsions, Inc. v. BASF Corp., No. 05-CV-5246 CBM(SSx),
2007 U.S. Dist. LEXIS 4837663 (C.D. Cal. Jan. 17, 2007) [court notes that
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pursuant to Robinson, supra, “the economic loss rule does not bar [plaintiff’s]
fraud and intentional misrepresentation claims because they were independent of
[Defendant’s] breach of contract.”]; Lincoln Gen. Ins. Co. v. Access Claims
Admin., Inc., 2007 U.S. Dist. LEXIS 67172, 2007 WL 2492436 (E.D. Cal. Aug.
29, 2007) [The district court distinguished between tort claims based on whether
they merely reiterate a breach of contract or whether there is an independent duty
that the Defendant has breached, and if the latter the rule does not bar the claim].
Thus, these authorities confirm that the analysis of whether tort recovery is
barred by the economic loss rule is dependent upon whether the fraudulent
conduct merely echoes a breach of contract or failure to perform an obligation of
the contract, or whether the fraudulent conduct concerns a duty imposed on the
defendant by law. In determining whether the economic loss rule applies, the
inquiry is whether the contracting party’s alleged conduct falls within the scope of
the contractual relationship, or whether there were separate, affirmative
misrepresentations that the other party justifiably relied on to its detriment.
Robinson, at p. 990 (citing Lazar, supra, 12 Cal.4th 631, 638).
Defendants fail to present any argument or evidence that the District Court’s
findings as to the sufficiency of the evidence supporting the jury’s finding of fraud
and misrepresentations outside of the contract was in error. Rather, Defendants
argue that the fraudulent claims must be interconnected with the breach of contract
claims and thus barred by the economic loss doctrine simply because the damages
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alleged for the fraud claims are similar to those for breach of contract. This
however is not the law.
(ii.) Contrary To Defendants’ Position, The Economic Loss Rule
Does Not Bar Tort Recovery In Every Case Where Only
Economic Damage Occur.
Defendants argue that the fraud and misrepresentation claims cannot be
independent of the contract claims simply because the damages arising from such
fraudulent conduct may be the same as those available in the breach of contract
claim. (AOB20-36.) Defendants claim the damages awarded for Defendants’
fraud is the same as the damages awarded for Defendants’ breach of contract.
(AOB20-21, 32.) Defendants cite only their own motions as support for this
proposition. (AOB30-31 [relying on Ms. Morgan’s Motion for Judgment].) To
the contrary, the record reflects that Hannibal suffered damage beyond the lost
profits under the terms of the parties’ contract. As Mr. Rionda testified, Hannibal
was blacklisted and unable to make a film for several years, and Mr. Mortorff
explained that in addition to the profits lost as a result of Morgan’s fraud,
Hannibal’s reputation, credibility and future business were also severely damaged.
(6/10RT:138, 6/17RT:138, 130-161.)
In any event, in Robinson the Supreme Court expressly rejected the
proposition that the economic loss rule bars tort recovery in every case where only
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economic damage occurs. Robinson, at p. 991 fn. 7.
Similar to Defendants here, the dissent in Robinson argued that because the
damage caused by the alleged tortuous conduct was purely economic, and thus
available under the breach of contract claims, the economic loss rule precluded
tort recovery. Just as Defendants argue, the dissent explained:
Robinson’s damages consisted exclusively of the costs associated
with identifying and replacing the defective product, costs that fall
squarely within the definition of economic loss. (See Jimenez v.
Superior Court, supra, 29 Cal.4th at p. 482, 127 Cal.Rptr.2d 614, 58
P.3d 450.) Because Robinson suffered only economic loss, its
recovery should have been limited to contract damages under its
breach of contract and breach of warranty claims.
This application of the economic loss rule solves the problem of how
to sanction deceit without chilling commercial relationships. It allows
tort liability in those instances where a misrepresentation may have
led to actual property damage or personal injury and, in doing so,
both sanctions and deters opprobrious conduct. But by excluding tort
recovery in those cases, like this one, where the only damages are
economic, it preserves the valuable distinction between tort and
contract remedies and avoids the problems that would arise if every
routine breach were susceptible to both tort and contract claims.
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Robinson, dissent, at p. 997-998 (see also Jimenez v. Superior Court 29 Cal.4th
473, 482 (2002) defining economic loss as including: “damages for inadequate
value, costs of repair and replacement of the defective product or consequent loss
of profits-without any claim of personal injury or damages to other property”).
Rejecting the dissent’s assertion, the Robinson majority explained that there
cannot be a bright line rule barring tort recovery in every case where the tort
damages are purely economic. Robinson, at p. 991 fn. 7. The Court stressed that
the economic loss rule was developed in the context of product liability claims and
extended to negligent breach of contract claims. Ibid. “Dealing with affirmative
acts of fraud and misrepresentation raises different policy concerns than those
raised by negligence or strict liability claims.” Ibid. (emphasis added).
As echoed above, these policy concerns ensure that a party’s fraudulent
conduct will not go unpunished simply because of the existence of a contract. See
Las Palmas, supra, 235 Cal.App.3d at p. 1238 (“no public policy is served by
permitting a party who never intended to fulfill his obligations to fraudulently
induce another to enter into an agreement.”); see also Lazar, 12 Cal.4th at p. 646.
Thus, in Mirzai v. Matossian, 2004 Cal.App. Unpub. LEXIS 9107, 72-75
(Cal.App.1st Dist. Oct. 8, 2004), the court rejected the defendant’s argument that
the “economic loss rule” precludes tort damages for plaintiffs’ claims of
intentional misrepresentation and trespass since the breach resulted neither in
bodily injury nor property damage, but only economic loss. In reaching this
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conclusion the Court cited e.g. the following cases, Jimenez v. Superior Court 29
Cal.4th 473, 482 (2002) [“recovery under the doctrine of strict liability is limited
solely to ‘physical harm to person or property’ “]; Aas v. Superior Court, supra, 24
Cal.4th 627 [homeowners may not recover damages in negligence for construction
defects that have not caused property damages]; Erlich, supra, 21 Cal.4th at pp.
552-554 [emotional distress damages not recoverable for the negligent breach of a
contract to construct a house where contractor’s negligence directly caused only
economic injury]; Sacramento Regional Transit Dist. v. Grumman Flxible 158
Cal.App.3d 289, 293 (1984) [“where damage consists solely of ‘economic losses,’
recovery on a theory of products liability is precluded”]; Zamora v. Shell Oil Co.
55 Cal.App.4th 204, 208-213 (1997) [economic loss rule precluded homeowners’
from recovering in negligence or strict liability for defective pipes used in the
construction of the plumbing systems in their homes where the pipes did not leak
or otherwise fail]; S.M. Wilson & Co. v. Smith Internat., Inc. 587 F.2d 1363, 1376
(1978) [buyer could not recover against seller on negligence cause of action for
the failure of a tunnel drilling machine to perform as expected]. Cited at Mirzai,
at pp. *73-74; see also Frank E. Maddocks, Inc. v. University Medical
Products/USA, Inc. L 2002396, 2 -3 (Cal.App. 2 Dist., 2005) [California Appellate
Court held the economic loss rule inapplicable to plaintiff’s fraud and intentional
misrepresentation claims, despite the fact that the damages awarded on the fraud
claims was equal to those awarded on the breach of contract, as the fraud claims
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“did not arise out of the purchase of a defective product” and “because such claims
are independent of the terms of the contract itself.”]
Defendants’ reliance on Astrium, S.A.S. v. TRW, Inc. 254 F.Supp.2d 1129
(C.D. Cal. 2003) to support its position that where the Plaintiff suffered only
contract-based damages as a result of the tortious conduct, the economic loss rule
applies to bar tort recovery is not persuasive. In Astrium the Court expressly
concluded that the alleged tortious conduct involved only breaches of the contract.
“Essentially, Astrium’s fraud claims relate to how Defendants breached their
contractual duties toward Astrium.” Astrium, at p. 1136. Thus, the Court properly
held that because the allegations of fraud concerned mere breaches of the contract,
the economic loss rule applied.
Defendants’ emphasis on the Astrium court’s discussion of the lack of
extra-contractual harm suffered by the Plaintiff to suggest that the analysis of
whether the tort claim is barred by the economic loss rule depends upon whether
the damages are the same as those for the breach of contract is simply erroneous.
(See AOB27-28.) Astrium does not support such a blanket proposition. In H.B.
Filmes, LTDA v. CBS, Inc., 98 Fed. Appx. 596, 599 (9th Cir. Cal. 2004), this Court
explained the narrowness of Astrium:
CBS contends that H.B.’s fraud theory concerns an alleged fraud in
the performance of a contract, which, CBS says, is not actionable
under California law. However, the case on which CBS relies for this
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proposition, Astrium v. TRW, 254 F. Supp. 2d 1129 (C.D. Cal. 2003)
has a far more limited holding. In Astrium, the District Court was
bound by a state court holding that “in actions arising from the sale or
purchase of a defective product, a plaintiff seeking to recover in tort
rather than in contract must be able to demonstrate that its economic
losses were accompanied by either (1) physical damage … or (2)
bodily injury.” Id. at 1135-36 at 1135-36.
The case at hand does not arise “from the sale or purchase of a
defective product,” but instead from the alleged misrepresentation of
revenues. It is thus factually more similar to Roddenberry v.
Roddenberry, in which the Plaintiff, Mrs. Roddenberry, was advised
by letter that she was receiving the full percentage of profits to which
she was entitled pursuant to a divorce settlement agreement, although
she was in reality receiving a lesser share. 44 Cal. App. 4th at 665.
The California Court of Appeals held that, at trial, Mrs. Roddenberry
had been able to satisfy every element of fraud, including duty of
disclosure. Id. at 666. We conclude from this holding that H.B.
likewise may be able to show that CBS had a duty of disclosure, and
we reverse the grant of summary judgment as to CBS’s fraud claim.
Here, just as in H.B. Filmes, this is not a product liability case. The harm caused
by the tortious conduct therefore is not dispositive of whether the economic loss
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rule applies.
Thus, contrary to the representations of Defendants, the economic loss
doctrine is not a blanket bar to the recovery of tort damages for economic losses.
Rather, recovery is barred when the claim alleged only economic damages
resulting from an alleged breach of contract. Here, as properly concluded by the
District Court, based on the evidence presented at trial, the fraud and
misrepresentations were not mere breaches of the contract but rather separate
independent tort breaches.
III. IN ANY EVENT, SONJA MORGAN WAS NOT A PARTY TO THE
CONTRACT, AND THUS CANNOT RELY UPON THE ECONOMIC
LOSS RULE AS A SHIELD FROM TORT LIABILITY
Sonja Morgan, individually, was not a party to the contract. As such, she
was not and could not be sued individually for breach of contract. See Reynolds v.
Bement 36 Cal.4th 1075, 1087 (2005) [It is well established that a corporate
officer is not personally liable for the corporation’s breach of contract based solely
on his or her official position.] That said, an officer or director may be sued
individually for their tortious conduct (see Frances T. v. Village Green Owners
Assn. 42 Cal. 3d 490, 503-504 (1986) [Officer and directors are liable to third
persons injured by their own tortious conduct regardless of whether they acted on
behalf of the corporation and regardless of whether the corporation is also liable]),
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which is precisely what occurred in this case. Ms. Morgan was sued in her
individual capacity for her tortious misconduct.
Nowhere in the Opening Brief do Defendants challenge the sufficiency of
the evidence against Ms. Morgan, individually, for her fraud and
misrepresentations. Rather, Defendants seek to shield Ms. Morgan from any
personal liability for the jury’s verdict under the guise of the economic loss rule.
However, because Ms. Morgan is not a party to the contract, the economic loss
rule cannot apply to bar Hannibal’s tort claims against her.
In the absence of contractual privity, the economic loss rule does not apply.
(See Simpkins v. S. Wine & Spirits of Am., Inc., 2010 U.S. Dist. LEXIS 91971
(N.D. Cal. Aug. 9, 2010); see also Luigino’s Int’l, Inc. v. Miller, 311 Fed. Appx.
289, 294-295 (11th Cir. Ga. 2009) [the economic loss rule is only applicable to
situations “where the parties are either in contractual privity or the defendant is a
manufacturer or distributor of a product, and no established exception to the
application of the rule applies.”]; Advisor’s Capital Investments Inc., v.
Cumberland Cas. & Sur. Co., No. 8:05-CV-404-T-23MAP, 2007 U.S. Dist.
LEXIS 5865, 2007 WL 220189, at *2 n.5 (M.D. Fla. Jan. 26, 2007) [economic loss
rule does not bar claims of fraudulent inducement and negligent misrepresentation
because Plaintiffs and defendants were not in contractual privity]; McLeod v.
Barber, 764 So. 2d 790, 792 (Fla. App. 2000) [“[T]he law is clear that the
economic loss doctrine does not apply to tort claims where there is no contractual
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5Furthermore, it should be noted that pursuant to Ms. Morgan’s Rule 50(b)Motion, the District Court found that there was no alter ego and thus that Ms.Morgan could not be personally liable for the breach of contract. Ms. Morganshould not be entitled to escape liability on the contract because the corporationhas a separate identity from her, but at the same time argue that she is entitled tothe benefit of the economic loss rule which arises from the very existence of a
49
relationship between the parties.”]; Williams v. Bear Stearns & Co., 725 So. 2d
397, 399 (Fla. App. 1998) [economic loss rule does not apply to tort claims of
negligent misrepresentation and breach of fiduciary duty against three defendants
who had no contractual relationship with the complaining party].
Here, as there was no privity between Hannibal and Sonja Morgan,
individually, the economic loss rule does not apply to preclude Hannibal’s fraud
claims against Ms. Morgan. Such a result not only comports with the law but also
sound public policy. It is simply unconscionable that a tortfeasor such as Ms.
Morgan should be shielded from liability under the economic loss rule, when she
is not personally liable for the breach of contract claims. As noted by the
California Supreme Court, the legal fiction of the corporation as an independent
entity was never intended to insulate officers and directors from liability for their
own tortious conduct. Frances T., supra, 42 Cal. 3d at pp. 507-508; Michaelis v.
Benavides, 61 Cal.App.4th 681, 688 (1998).
Accordingly, even if the Court were to conclude that the economic loss rule
undermines the fraud judgment against Sonja Productions, the fraud judgment
against Ms. Morgan individually must still be affirmed.5
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contractual relationship.
6It should be noted that this Court has the discretion to deem the issue ofsufficiency of the evidence procedurally barred, even if construed as part ofDefendants’ Rule 59 motion, as a Rule 59 motion may not be used to raisearguments for the first time when they could reasonably have been raised earlier inthe litigation. See Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir.2003) (citingKona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000)).
50
IV. AS CONCLUDED BY THE DISTRICT COURT, SUBSTANTIAL
EVIDENCE SUPPORTS THE DAMAGES AWARD AND THUS
NEITHER A REMITTITUR NOR A NEW TRIAL IS WARRANTED
Defendants’ second challenge on appeal concerns the sufficiency of the
evidence supporting the jury’s award of damages. As explained above,
Defendants’ position that the judgment must be reversed because the District
Court erred in denying the motion for JNOV is forfeited. Defendants’ alternative
request that this Court reverse the District Court’s denial of the motion for new
trial and force Plaintiff to accept a remittitur, or submit to a new trial, is meritless.6
Defendants argue that the judgment must be reversed because the jury
improperly allowed Plaintiff to recover $6.5 million in lost profits. (AOB37-55.)
Defendants introduce their argument by criticizing Plaintiff’s evidence of lost
profits as “purely hypothetical” (ignoring Defendants’ fraud made it so);
erroneously claiming (without authority) Defendants were entitled to a
“presumption” that the film would have generated no profit; and arguing that the
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jury awarded lost profits damages on the “unsubstantiated assumptions” that the
film would have been completed, much less successful (again ignoring that on
appeal, the evidence is viewed in the light most favorable to Plaintiff). All of
Defendants’ arguments are legally and factually flawed.
The District Court properly rejected Defendant Sonja Morgan’s arguments
in her Rule 59(a) Motion for New Trial and Remittitur that the damages awarded
to Plaintiff against Defendants were not recoverable under the specious theory that
Fast Flash was an unestablished business and could not recover lost profits.
(CD:200.) The District Court explained,
“Based on the evidence presented, it is reasonable to conclude that Fast
Flash to Bang Time would have been made but/for Defendants’ actions
given that Plaintiff had, among others, a commitment from the Royal Bank
of Scotland to finance the entire production, secured an acting commitment
from John Travolta, made approximately $6.7 million in foreign presales,
and arranged a filming start date. Moreover, the Court finds that Larry
Mortoff was a credible witness and possessed the necessary skills, based on
his background, to adequately estimate the film’s projected revenue and,
accordingly, calculate the amount of loss suffered by the Plaintiff as a direct
result of Defendants’ actions. . . . The facts and testimony presented at trial
established a reasonable basis for the jury’s damages award and the Court
will not intervene because Defendant, without a suitable legal basis, simply
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disagrees with jury’s conclusions.”
(ER3-4 (emphasis added).)
As Defendants have patently failed to meet their “substantial burden” of
demonstrating that the District Court abused its discretion, no new trial is
warranted and the District Court’s order should be affirmed.
A. Defendants Misrepresent The Applicable Standard Of Review.
In arguing that the District Court erred in denying Defendants’ motion for
new trial on the issue of excessive damages, Defendants misstate the applicable
standard of review, contending among other things that “the trial evidence failed
to establish as a matter of law that the film would have been completed or
generated revenue” (AOB40), “the overwhelming evidence at trial established that
Hannibal Pictures would not have made money from Fast Flash” (AOB41),
“Hannibal Pictures could not as a matter of law demonstrate with reasonable
certainty that it would have received any of the compensation that it claimed to
have lost” (AOB47), and “Mr. Mortorff’s methodology is insufficient for three
reasons to project with sufficient certainty the occurrence or amount of lost
profits” (AOB50).
As this Court made clear: “We review the district court’s ruling on a motion
for a new trial under Rule 59(a) for an abuse of discretion. McEuin v. Crown
Equip. Corp., 328 F.3d 1028, 1032 (9th Cir. 2003).
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A district court’s denial of a motion for new trial will not be overturned
absent a clear abuse of discretion – i.e., “only where there is an absolute absence
of evidence to support the jury's verdict.” Desrosiers v. Flight Int'l of Florida
Inc., 156 F.3d 952, 957 (9th Cir. 1998) (emphasis added); see Hangarter v.
Provident Life & Acc. Ins. Co., 373 F3d 998, 1005 (9th Cir. 2004); City Solutions,
Inc. v. Clear Channel Communications, Inc., 365 F3d 835, 843 (9th Cir. 2004).
Therefore, contrary to Defendants’ arguments, this Court’s review is limited
to whether there is any evidence in support of the jury’s damage award.
As now detailed, and as the District Court explicitly found, there is
abundant evidence in support of the jury’s damages award.
B. Hannibal Proved With Reasonable Certainty That The
Film Would Have Been Completed And Generated Net
Profits Shown By Expert Testimony.
Defendants agree that Plaintiff was required only to present evidence
sufficient to allow “a reasonable trier of fact to find with reasonable certainty lost
net profits” from the alleged misconduct by Defendants. Kids’ Universe v.
In2Labs, 95 Cal.App.4th 870, 887 (2002); see also Parlour Enterprises, Inc. v.
The Kirin Group, Inc., 152 Cal.App.4th 281, 289 (2007); Arntz Contracting Co. v.
St. Paul Fire & Marine Ins. Co. 47 Cal.App.4th 464, 489-490 (1996) [“As to the
reasonableness of the assumptions underlying the experts’ lost profit analysis,
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criticisms of an expert’s method of calculation is a matter for the jury’s
consideration in weighing that evidence.]
Nevertheless, Defendants challenge the amount of the jury’s damages award
of lost profits with several arguments, all of which are meritless.
Defendants first argue, without any authority, that “California law presumes
that a Plaintiff cannot recover lost compensation that might have been received
from an unestablished business venture.” (AOB38-40.) This contention is both
factually and legally erroneous.
First, there is considerable evidence to support the fact that Hannibal was an
established business. Hannibal was founded in 1999, and finances, produces and
distributes three (3) to six (6) motion pictures per year with budgets ranging from
three to twenty million dollars ($3,000,000-$20,000,000). (6/11RT:149-151.)
Hannibal was involved in several other productions during the pre-production of
Fast Flash. (6/10RT:51.)
Moreover, the attempt by Defendants to analyze Fast Flash as an
unestablished business venture is improper and illogical. In fact, if Defendants’
argument is taken to its logical conclusion, any movie that is not a sequel, a
spin-off, or part of a movie franchise, would be an embryonic venture. Clearly,
the relevant analysis does not examine the movie itself, but rather the producers
behind it.
Second, none of the cases cited by Defendants, nor any other case of which
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Plaintiff is aware, holds that there is any such presumption against recovery of lost
profits. To the contrary, whether or not the business venture is established,
California law permits the plaintiff’s ability to recover lost profits. Indeed, the
very cases that are cited by Defendants make it clear that recovery for lost profits
is permissible even where a business is unestablished: “On the other hand, lost
anticipated profits for an unestablished business whose operation is prevented or
interrupted are generally not recoverable because their occurrence is uncertain,
contingent and speculative. Nevertheless, they may be recovered “ ‘where the
evidence makes reasonably certain their occurrence and extent.’ [Citations.]”
Parlour Enterprises, Inc. v. Kirin Group, Inc., 152 Cal.App.4th 281, 287-288
(2007) citing Kids’ Universe v. In2Labs, 95 Cal.App.4th 870, 883 (2002).
Thus, even assuming arguendo that the relevant analysis was for an
unestablished business, Plaintiff established the damages in the form of lost profits
with reasonable certainty. Moreover, “expert testimony alone is a sufficient basis
for an award of lost profits in the new business context when the expert opinion is
supported by tangible evidence with a ‘substantial and sufficient factual basis’
rather than by mere ‘speculation and hypothetical situations.’” Parlour
Enterprises, Inc. v. Kirin Group, Inc., 152 Cal.App.4th 281, 287-288 (2007)
(internal citations omitted) (emphasis supplied).
Defendants’ second argument is equally meritless. Defendants contend that
“the trial evidence failed to establish as a matter of law that the film would have
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been completed or generated revenue.” (AOB40-47.) At the outset, Defendants
misstate the appropriate standard of review. Plaintiff is not required to establish as
a matter of law that the evidence below demonstrated that the film would have
been made. On appeal, viewing the evidence in the light most favorable to the
jury’s verdict, the only question is whether there is any evidence to support the
jury’s conclusion that the film would have been completed and generated revenue.
Not only is there any evidence in the record to support the jury’s conclusion,
there is abundant evidence. Plaintiff had a letter of commitment from the Royal
Bank of Scotland to fully finance the film. (6/16RT:68-71,120.) Hannibal took
several steps in pre-production, including budgets, schedules, casting major stars
such as Rosario Dawson and John Travolta and location scouting. Plaintiff had
also secured foreign pre-sales for over six million dollars for Fast Flash before and
after Sonja Productions became involved. (SER:125-143.) As noted above, there
was abundant evidence presented that Hannibal, which specializes in international
co-productions of motion pictures, financed, produced and distributed three to six
films per year with budgets ranging from three to twenty million dollars.
(6/9RT:149-151.) This evidence fully demonstrated “there has been ‘operating
experience sufficient to permit a reasonable estimate of probable income and
expense.’” Maggio, Inc. v. UFW, 227 Cal.App.3d 847, 870 (1991) (quoting
Natural Soda Prod. Co. v. City of Los Angeles, 23 Ca1.2d 193, 199 (1943); see
Grupe v. Glick, 26 Ca1.2d 680, 693 (1945) (“anticipated profits dependent upon
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future events are allowed where their nature and occurrence can be shown by
evidence of reasonable reliability”).
Defendants’ argument that it is mere speculation whether “Fast Flash”
would have been made is belied by Hannibal’s long experience and expertise in
the movie business. The defendant in Maggio, Inc. v. UFW, made a similar
argument contending that by virtue of simply entering into a new contract, a
business which had been in operation “for years” should be recognized as a “new
business.” Maggio, Inc. v. UFW, 227 Cal.App.3d at 870. The Court rejected that
argument outright and found this logic to be without merit. Id. Equally and
comparably compelling, Hannibal’s experience in the independent movie
production field does not make its production of the movie Fast Flash to Bang
Time a new and unestablished business venture. Much like the business in
Maggio, Inc. v. UFW, Hannibal has a demonstrated track record in producing
motion pictures for numerous years. (6/9RT:149-151.) Given Hannibal’s
extensive background and experience in the motion picture business, coupled with
the evidence that Royal Bank of Scotland had committed to finance the production
and John Travolta and his desired co-star Rosario Dawson had agreed to star in the
film, there is ample evidence to support the jury’s conclusion that it is reasonably
certain Fast Flash would have been completed and distributed.
Defendants’ third argument is that “Hannibal Pictures failed to rebut the
presumption that Fast Flash would not have generated revenues” and “at most, the
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trial evidence supports a damages award of $212,094.” (AOB47-52.) This
argument too is meritless. First, as discussed above, there is no such presumption,
so Defendants improperly frame the issue on appeal. To the contrary, given the
appropriate standard of review, it is presumed there is evidence supporting the
jury’s conclusion that the film would have generated revenues. Humetrix, Inc. v.
Gemplus S.C.A., 268 F.3d 910, 921 (9th Cir. 2001).
Second, as detailed above, the abundant evidence at trial supporting the
judgment, including the expert testimony from Mr. Mortorff, established the
reasonable certainty that Fast Flash would have generated the revenues awarded
by the jury and further that because of the collapse of the film, Hannibal was
blacklisted and unable to make a film for several years. (6/10RT:138,
6/17RT:130-161.) Defendants did not present an alternate theory of damages, nor
did they present any rebuttal by way of expert witnesses.
In short, Hannibal amply demonstrated that more than a reasonable
probability existed that Fast Flash would have been made and resulted in a profit,
but for Defendants’ tortious conduct. For all the reasons discussed above, the
District Court acted well within its discretion in denying Defendants’ post-trial
motions based on the abundant evidence at trial, the applicable legal authority
governing the recovery of lost profits, and the appropriate standard of review on
appeal.
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CONCLUSION
For the foregoing reasons, the judgment should be affirmed in full.
Dated: October 29, 2010 Respectfully submitted,
HAMRICK & EVANS, LLP
ESNER, CHANG & BOYER
By: s/ Stuart B. Esner
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STATEMENT OF NO RELATED CASES
There are no known related cases pending in the Ninth Circuit.
s/ Stuart B. Esner
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CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
Pursuant to Rule 32(a)(7)(b)(I) of the F.R.A.P., I hereby certify that the
foregoing brief contains 13,101 words, excluding the parts of the brief exempted
by Fed.R.App.P. 32(a)(7)(B)(iii).
This brief complies with the typeface requirements of Fed.R.App.P. 32(a)(5)
and the type style requirements of Fed.R.App.P. 32(a)(6) because it has been
prepared in a proportionally spaced typeface using WordPerfect in 14-point Times
New Roman font.
S/ Stuart B. Esner
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ADDENDUM
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ADDENDUM OF PERTINENT STATUTES
Federal Rules of Civil Procedure 50
Rule 50. Judgment as a Matter of Law in a Jury Trial; Related Motion for a
New Trial; Conditional Ruling
(a) Judgment as a Matter of Law.
(1) In General. If a party has been fully heard on an issue during a jury trial
and the court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that issue, the court
may:
(A) resolve the issue against the party; and
(B) grant a motion for judgmen t as a matter of law aga inst the party on
a claim or defense that, under the controlling law, can be maintained
or defeated only with a favorable finding on that issue.
(2) Motion. A motion for judgment as a matter of law may be made at any time
before the case is submitted to the jury. The motion must specify the
judgment sought and the law and facts that entitle the movant to the
judgmen t.
(b) Renewing the Motion After Trial; Alternative Motion for a N ew Trial. If the
court does not grant a motion for judgment as a matter of law made under Rule
50(a), the court is considered to have submitted the ac tion to the jury subject to the
court’s later deciding the legal questions raised by the motion. No later than 28
days after the entry of judgment–or if the motion addresses a jury issue not
decided by a verdict, no later than 28 days after the jury was discharged–the
movant may file a renewed motion for judgment as a matter of law and may
include an alternative or joint request for a new trial under Rule 59. In ruling on
the renew ed motion, the court may:
(1) allow judgment on the verdict, if the jury returned a verdict;
(2) order a new trial; or
(3) direct the entry of judgment as a matter of law.
(c) Granting the Renewed Motion; Conditional Ruling on a Motion for a New
Trial.
(1) In Genera l. If the court grants a renewed motion for judgment as a matter
of law, it must also conditionally rule on any motion for a new trial by
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determining whether a new trial should be granted if the judgment is later
vacated or reversed. The court must state the grounds for conditionally
granting or denying the m otion for a new trial.
(2) Effect of a Conditional Ruling. Conditionally granting the motion for a
new trial does not affect the judgment’s finality; if the judgm ent is
reversed, the new trial must proceed unless the appellate court orders
otherwise. If the motion for a new trial is conditionally denied, the
appellee may assert error in that denial; if the judgment is reversed, the
case must proceed as the appellate court orders.
(d) Time for a Losing Party’s New-Trial Motion. Any motion for a new trial under
Rule 59 by a party against whom judgment as a matter of law is rendered must be
filed no later than 28 days a fter the entry of the judgment.
(e) Denying the M otion for Judgment as a Matter of Law; Reversal on Appea l.
If the court denies the motion for judgment as a m atter of law, the prevailing party
may, as appellee , assert grounds entitling it to a new trial should the appella te
court conclude that the trial court erred in denying the motion. If the appellate
court reverses the judgment, it may order a new trial, direct the trial court to
determine whether a new trail should be granted, or direct the entry of judgmen t.
Federal Rules of Civil Procedure 59
Rule 59. New Trial; Altering or Amending a Judgment
(a) In General.
(1) Grounds for New Trial. The court may, on motion, grant a new trial on all
or some of the issues–and to any party–as follows:
(A) after a jury trial, for any reason for which a new trial has heretofore
been granted in an action at law in federal court; or
(B) after a nonjury trial, for any reason for which a rehearing has
heretofore been gran ted in a suit in equity in federal court.
(2) Further Action After a Nonjury Trial. After a nonjury trial, the court
may, on a motion for a new trial, open the judgment if one has been
entered, take additional testimony, amend findings of fact and conclusions
of law or make new ones, and direct the entry of a new judgmen t.
(b) Time to File a Motion for New Trial. A motion for new trial must be filed no
later than 28 days after the entry of judgment.
(c) Time to Serve Affidavits. When a motion for a new trial is based on affidavits,
they must be filed with the motion. The opposing party has 14 days after being
served to file opposing affidavits. The court may permit reply affidavits.
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(d) New Trial on the Court’s Initiative or for Reasons Not in the Motion. No later
than 28 days after the entry of judgment, the court, on its own, may order a new
trial for any reason that would justify granting one on a party’s motion. After
giving the parties notice and an opportunity to be heard, the court may grant a
timely motion for a new trial for a reason not stated in the motion. In either event,
the court must specify the reasons in its order.
(e) Motion to Alter or Amend a Judgmen t. A motion to alter or amend a judgment
must be filed no later than 28 days af ter the entry of the judgmen t.
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9th Circuit Case Number(s) U.S.C.A. Docket No. 09-56584
******************************************************************CERTIFICATE OF SERVICE
When All Case Participants are Registered for the Appellate CM/ECF System
I hereby certify that I electronically filed the foregoing with the Clerk of the Courtfor the United States Court of Appeals for the Ninth Circuit by using the appellateCM/ECF system on (date) _____________________________
I certify that all participants in the case are registered CM/ECF users and thatservice will be accomplished by the appellate CM/ECF system.
Signature (use “s/” format) ____________________________
******************************************************************CERTIFICATE OF SERVICE
When Not All Case Participants are Registered for the Appellate CM/ECFSystem
I hereby certify that I electronically filed the foregoing with the Clerk of the Courtfor the United States Court of Appeals for the Ninth Circuit by using the appellateCM/ECF system on (date) October 29, 2010
Participants in the case who are registered CM/ECF users will be served by theappellate CM/ECF system.
I further certify that some of the participants in the case are not registeredCM/ECF users. I have mailed the foregoing document by First Class Mail, postageprepaid, or have dispatched it to a third party commercial carrier for deliverywithin 3 calendar days to the following non-CM/ECF participants:
David L. Evans
HAMRICK & EVANS, LLP
10 Universal Drive, Suite 2200
Universal City, CA 91608
Signature s/ Vicki R. Butler
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