Edu-Science (USA) Inc. v. Intubrite, LLC, No. 3:2012cv01078 - Document 144 (S.D. Cal. 2015)

Court Description: ORDER Granting 128 Plaintiff's Motion for Partial Summary Judgment: The Court grants in part Edu-Science's motion for partial summary judgment. The Court dismisses IntuBrite's third, fourth, fifth, sixth, and seventh counterclaims and request for punitive damages. The Court denies the motion as it relates to IntuBrite's second counterclaim. Signed by Judge Cynthia Bashant on 6/23/15. (dlg)

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1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNIA 13 14 EDU-SCIENCE (USA) INC., Plaintiff, 15 16 17 18 19 v. Case No. 12-cv-1078 BAS (JLB) ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT Plaintif v. [ECF 128] Defenda INTUBRITE LLC, Defendant. AND RELATED COUNTERCLAIMS 20 21 On April 23, 2015, Plaintiff Edu-Science (USA) Inc. (“Edu-USA”) and 22 Counter-Defendant Edu-Science (HK) Ltd. (“Edu-HK”) (collectively, “Edu- 23 Science”) moved for partial summary judgment (ECF 128) on Defendant and 24 Counter-Complainant IntuBrite LLC’s (“IntuBrite”) second, third, fourth, fifth, 25 sixth, and seventh counterclaims, as set forth in IntuBrite’s First Amended 26 Counterclaim (“IACC”, ECF 99). IntuBrite has abandoned its third, fourth, and 27 fifth claims. Intubrite’s Mem. of Facts and Contentions of Law 12, ECF 130. The 28 Court heard oral argument on the motion on June 22, 2015. For the following –1– 12-cv-1078 BAS (JLB) 1 reasons, the Court GRANTS summary judgment on IntuBrite’s sixth and seventh 2 counterclaims in favor of the movants and DENIES summary judgment on 3 IntuBrite’s second counterclaim. 4 I. BACKGROUND 5 On February 16, 2013, Edu-USA sued IntuBrite for breach of contract. Edu- 6 USA alleges that IntuBrite breached its contract to purchase custom-manufactured 7 instruments for tracheal intubation from Edu-USA. 8 IntuBrite, in the counterclaim addressed in the present motion, alleged that 9 the products delivered were defective and untimely. IACC ¶¶ 33–35. IntuBrite 10 further claims it paid fully for the products it actually received. IACC ¶ 36. 11 IntuBrite has chosen to proceed on four of the seven claims against Edu-USA and 12 Edu-HK: (1) breach of contract; (2) breach of the implied warranty of 13 merchantability; (6) intentional misrepresentation of fact; and (7) negligent 14 misrepresentation of fact. 15 The Court previously denied Edu-USA and Edu-HK’s request to assert tort 16 claims. ECF 118. Now, Edu-USA and Edu-HK move to dismiss IntuBrite’s tort 17 claims because IntuBrite lacks substantial evidence to support its claims. They also 18 move to dismiss IntuBrite’s second claim, arguing that IntuBrite’s evidence of 19 damages is inadmissible. IntuBrite’s Opposition to the motion includes evidence to 20 support the breach of implied warranty claim, but it fails to point to substantial 21 evidence supporting material elements of the tort claims. Therefore the Court must 22 grant summary judgment in favor of Edu-USA and Edu-HK on the sixth and 23 seventh claim and deny summary judgment on the second claim. LEGAL STANDARD 24 II. 25 Summary judgment is appropriate on “all or any part” of a claim if there is 26 an absence of a genuine issue of material fact and the moving party is entitled to 27 judgment as a matter of law. Fed.R.Civ.P. 56; see also Celotex Corp. v. Catrett, 28 477 U.S. 317, 322 (1986) (“Celotex”). A fact is material when, under the –2– 12-cv-1078 BAS (JLB) 1 governing substantive law, the fact could affect the outcome of the case. See 2 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Freeman v. 3 Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is 4 genuine if “the evidence is such that a reasonable jury could return a verdict for the 5 nonmoving party.” Anderson, 477 U.S. at 248. One of the principal purposes of 6 Rule 56 is to dispose of factually unsupported claims or defenses. See Celotex, 477 7 U.S. at 323–24. 8 The moving party bears the initial burden of establishing the absence of a 9 genuine issue of material fact. See Celotex, 477 U.S. at 323. “The burden then 10 shifts to the nonmoving party to establish, beyond the pleadings, that there is a 11 genuine issue for trial.” 12 (9th Cir. 2006) (citing Celotex, 477 U.S. at 324). Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 13 “[W]hen the non-moving party bears the burden of proving the claim or 14 defense, the moving party can meet its burden by pointing out the absence of 15 evidence from the non-moving party. The moving party need not disprove the 16 other party's case.” Miller, 454 F.3d at 987 (citing Celotex, 477 U.S. at 325). 17 “Thus, ‘[s]ummary judgment for a defendant is appropriate when the plaintiff fails 18 to make a showing sufficient to establish the existence of an element essential to 19 [his] case, and on which [he] will bear the burden of proof at trial.’ ” Miller, 454 20 F.3d at 987 (quoting Cleveland v. Policy Management Sys. Corp., 526 U.S. 795, 21 805–06 (1999) (internal quotations omitted)). 22 A genuine issue at trial cannot be based on disputes over “irrelevant or 23 unnecessary facts[.]” See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 24 809 F.2d 626, 630 (9th Cir. 1987). Similarly, “[t]he mere existence of a scintilla of 25 evidence in support of the nonmoving party's position is not sufficient.” Triton 26 Energy Corp. v. Square D. Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (citing 27 28 –3– 12-cv-1078 BAS (JLB) 1 Anderson, 477 U.S. at 252).1 The party opposing summary judgment must “by [his 2 or her] own affidavits, or by the ‘depositions, answers to interrogatories, and 3 admissions on file,’ designate ‘specific facts showing that there is a genuine issue 4 for trial.’ ” Celotex, 477 U.S. at 324 (quoting Fed. R. Civ. P 56(e)). That party 5 cannot “rest upon the mere allegations or denials of [his or her] pleadings.” Fed. R. 6 Civ. P. 56(e). 7 When making its determination, the Court must view all inferences drawn 8 from the underlying facts in the light most favorable to the nonmoving party. See 9 Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 10 “Credibility determinations, the weighing of evidence, and the drawing of 11 legitimate inferences from the facts are jury functions, not those of a judge, [when] 12 ruling on a motion for summary judgment.” Anderson, 477 U.S. at 255. III. 13 ANALYSIS A. 14 Breach of Implied Warranty of Merchantability 15 Edu-Science moves for summary judgment on IntuBrite’s second claim for 16 Breach of Implied Warranty of Merchantability on the grounds that IntuBrite 17 cannot prove it was damaged because of the claimed breach. Primarily, Edu- 18 Science objects to the admissibility of Leslie Tenger’s Declaration. The Court 19 OVERRULES these objections without prejudice to re-raising them at trial. 20 Tenger states that IntuBrite’s employees spent approximately 4,700 hours 21 “performing quality control” related to Edu-Science goods. Tenger Decl. ¶ 4, ECF 22 134-2. She also states she personally spent approximately 1,175 hours performing 23 quality control on Edu-Science goods. Id. ¶ 5. Edu-Science argues this is 24 inadmissible because it includes inspection of all of Edu-Science’s provided goods, 25 not just those that breached the warranty of merchantability. 26 27 28 1 See also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (if the moving party meets this initial burden, the nonmoving party cannot defeat summary judgment by merely demonstrating “that there is some metaphysical doubt as to the material facts”). –4– 12-cv-1078 BAS (JLB) 1 At this point, Edu-Science has provided no case law beyond the text of 2 California Commercial Code § 2715(1) to support its contention that only 3 inspection of defective goods are incidental damages of this breach. In Peterson 4 Bros. v. Mineral King Fruit Co., 140 Cal. 624, 633 (1903), the court found that 5 expenses incurred examining goods that were merchantable could not be 6 recovered. Conversely, if “goods are rightly rejected because of what the 7 inspection reveals, demonstrable and reasonable costs of the inspection are part of 8 [] incidental damage caused by the seller's breach.” Cal. Comm. Code § 2513, 9 Official Comment 4. 10 In this case, Tenger states Edu-Science inspected 36,054 laryngoscope 11 blades, of which 6,580 were defective. Tenger Decl. ¶ 2. Assuming that these 12 blades were rightfully rejected, a reasonable inspection may include inspection of 13 all of the blades. Therefore substantial evidence supports damages for this cause of 14 action. Accordingly, the Court DENIES Edu-Science’s motion for summary 15 judgment on IntuBrite’s second claim for breach of implied warranty of 16 merchantability. 17 B. Tort Claims 18 IntuBrite’s sixth and seventh claims, for intentional and negligent 19 misrepresentation of fact, are both premised on two distinct alleged 20 misrepresentations. First, IntuBrite alleges that Patrick Ng represented that Edu- 21 USA was the United States Office of Edu-HK. Construing facts in favor of 22 IntuBrite, the Court accepts that this representation was false at the time it was 23 made in 2009, even though IntuBrite has failed to attach supporting evidence to its 24 Opposition. However, while this misrepresentation may have been made, there is 25 no evidence showing that this fact is material. IntuBrite alleges they would not 26 have entered into the contract if they had known the Edu-Science entities were 27 separate, but it fails to show how this is material. Without such a showing, 28 IntuBrite cannot support its assertion that this fact was material. –5– 12-cv-1078 BAS (JLB) 1 Additionally, there is no evidence to support IntuBrite’s unfounded belief 2 that Patrick Ng intended to supply late and substandard goods to IntuBrite. John 3 Hicks declares that the goods were “routinely delivered late and some of the 4 delivered products had serious defects” to support IntuBrite’s position. Hicks Decl. 5 ¶ 8, ECF 134-1. This is insufficient. First, IntuBrite admits that the majority of the 6 products delivered conformed to its specifications. See Tenger Decl. This 7 conformity demonstrates Edu-Science’s attempt to fulfill the contract, negating any 8 speculation that at the time the contract was entered into, Edu-Science intended to 9 breach it. Similarly, Ng’s statements that Edu-Science would meet deadlines 10 preceded the actual contract by five months. There is no evidence that Ng 11 represented that Edu-Science could meet specific deadlines in April 2009. Based 12 on Ng’s deposition testimony, the deadline in question was not transmitted to Ng 13 until September 10, 2009. Ng Dep. 120, ECF 138-1. Accordingly, because there 14 were no material misrepresentations that were false when made, the tort claims are 15 DISMISSED. 16 17 C. Punitive Damages Edu-Science seeks summary judgment on IntuBrite’s prayer for punitive 18 damages because IntuBrite’s fourth and sixth causes of action have no evidentiary 19 support. Mot. 14:4–9, ECF 128. IntuBrite has subsequently abandoned its fourth 20 cause of action, but it still asserts that it “presents evidence of EDU’s fraudulent 21 inducement of IntuBrite to enter into a contract, which could support an award of 22 punitive damages.” Opp. 9:14–17, ECF 134. 23 California Civil Code § 3294 provides for punitive damages “[i]n an action 24 for the breach of an obligation not arising from contract, where it is proven by clear 25 and convincing evidence that the defendant has been guilty of oppression, fraud, or 26 malice[.]” § 3294(a). 27 Here, the Court has dismissed all claims not stemming from the contract. See 28 Section III.B., supra. Because the remaining claims arise on the contract, California –6– 12-cv-1078 BAS (JLB) 1 law does not permit a punitive damages award. Accordingly, because the evidence 2 cannot support punitive damages, the request for punitive damages is DISMISSED. 3 IV. 4 For the foregoing reasons, the Court GRANTS IN PART Edu-Science’s 5 motion for partial summary judgment. ECF 128. The Court DISMISSES 6 IntuBrite’s third, fourth, fifth, sixth, and seventh counterclaims and request for 7 punitive damages. ECF 99. The Court DENIES the motion as it relates to 8 IntuBrite’s second counterclaim. ECF 128. 9 10 CONCLUSION IT IS SO ORDERED. Dated: June 23, 2015 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 –7– 12-cv-1078 BAS (JLB)

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