Unicom Systems, Inc. v. Farmers Group, Inc. , 405 F. App'x 152 ( 2010 )

FILED
NOT FOR PUBLICATION DEC 02 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
UNICOM SYSTEMS, INC., a California No. 08-56777
corporation,
D.C. No. 2:04-cv-04604-AJW
Plaintiff - Appellant,
v. MEMORANDUM *
FARMERS GROUP, INC., a Nevada
corporation,
Defendant - Appellee.
UNICOM SYSTEMS, INC., a California No. 08-56827
corporation,
D.C. No. 2:04-cv-04604-AJW
Plaintiff - Appellee,
v.
FARMERS GROUP, INC., a Nevada
corporation,
Defendant - Appellant.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
UNICOM SYSTEMS, INC., a California No. 09-56080
corporation,
D.C. No. 2:04-cv-04604-AJW
Plaintiff - Appellee,
v.
FARMERS GROUP, INC., a Nevada
corporation,
Defendant - Appellant.
Appeal from the United States District Court
for the Central District of California
Andrew J. Wistrich, Magistrate Judge, Presiding
Argued and Submitted November 4, 2010
Pasadena, California
Before: SCHROEDER and TALLMAN, Circuit Judges, and JARVEY, District
Judge.**
This case arises from a software license agreement between the parties
incorporating California law.1 We have jurisdiction under 28 U.S.C. § 1291. We
affirm.
First, we need not consider Unicom’s argument that the magistrate judge
erred in submitting a jury instruction on Farmers’ unclean hands defense. Even
**
The Honorable John A. Jarvey, United States District Judge for the
Southern District of Iowa, sitting by designation.
1
The parties are familiar with the facts. We repeat them only as necessary to
explain our disposition.
assuming Unicom is correct, any such error was harmless. The instruction
unequivocally told the jury to award Unicom no damages in its entire action
against Farmers if the jury found unclean hands. But the jury did award Unicom
damages—$816,000 on Unicom’s fraud claim. Thus, the jury apparently rejected
Farmers’ unclean hands defense. We will not presume the jury disregarded the
instruction to somehow lessen the damages otherwise awarded to Unicom.
We also do not reach Unicom’s argument that the magistrate judge erred in
admitting evidence of the purchase price Unicom paid for the PIE/CICS software.
Unicom waived its objection to the purchase-price evidence by being the first party
to introduce it at trial, having previously failed on a motion in limine to exclude it.
See Ohler v. United States, 529 U.S. 753, 755–58 (2000).
The magistrate judge did not err in submitting a jury instruction on Farmers’
set-off claim. California law allows a party to assert a valid cross-demand for
money to set off an opposing party’s damages, even when that cross-demand
would otherwise be time-barred. Cal. Civ. Proc. Code § 431.70. Farmers’ legal
theory underlying the set-off instruction was that Unicom breached the parties’
software license agreement by failing to provide the contractually required sixty-
days notice of price changes, thus overbilling Farmers $307,356 on three invoices.
To counter, Unicom claims its invoices themselves gave Farmers proper notice of
its new prices. At trial, the parties contested several aspects of this issue. Through
the set-off instruction, the magistrate judge properly allowed the jury to consider
whether Unicom had fulfilled its contractual notice obligation in this way. See
Associated Lathing & Plastering Co. v. Louis C. Dunn, Inc., 286 P.2d 825, 830
(Cal. Ct. App. 1955) (holding that whether a party has materially breached a
contractual provision is a question of fact).
We find no error in the magistrate judge’s award to Farmers of $1,668,591
in attorney’s fees under the license agreement. The agreement broadly authorized
attorney’s fees to the “prevailing party” if “litigation is required.” Under
California law, the magistrate judge properly analyzed whether Farmers prevailed
on the breach of contract claim alone, notwithstanding Unicom’s net monetary
recovery. See Hsu v. Abbara, 891 P.2d 804, 811 (Cal. 1995); Sears v. Baccaglio,
60 Cal. App. 4th 1136, 1139, 1142, 1147–48 (Cal. Ct. App. 1998).
Lastly, we reject Farmers’ claim on cross-appeal that the magistrate judge
erred in awarding Unicom $1,581,532 in attorney’s fees under both the Copyright
Act and the license agreement. Unicom was the prevailing party on its copyright
claims. See Wall Data Inc. v. L.A. County Sheriff’s Dep’t, 447 F.3d 769, 787 (9th
Cir. 2006). This prevailing-party status permitted a discretionary fee award. See
17 U.S.C. §§ 505, 1203(b)(5). The magistrate judge did not abuse his discretion in
applying several factors laid out by the Supreme Court to conclude that a fee award
was appropriate under the Copyright Act. See Fogerty v. Fantasy, Inc., 510 U.S.
517, 534 n.19 (1994). As to the license agreement, the contractual fee language
was broad enough to permit a fee award for Unicom’s successful fraud claim,
which was intrinsically related to the license agreement. See Santisas v. Goodin,
951 P.2d 399, 405 (Cal. 1998). The court did not abuse its discretion in refusing to
apportion Unicom’s fees among the several claims. The claims involved a
common core of facts and related legal theories. See Hensley v. Eckerhart, 461
U.S. 424, 434–35 (1983).
AFFIRMED.