Navcom Technology, Inc. v. Oki Electric Industry Co, Ltd. ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 5 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NAVCOM TECHNOLOGY, INC., and No. 17-16446
DEERE & COMPANY,
D.C. No. 5:12-cv-04175-EJD
Plaintiffs-Appellants,
v. MEMORANDUM*
OKI ELECTRIC INDUSTRY CO, LTD.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Argued and Submitted November 16, 2018
San Francisco, California
Before: HAWKINS, GRABER, and THACKER,** Circuit Judges.
Plaintiffs NavCom Technology, Inc., and Deere & Company (“Navcom”)
challenge the district court’s judgment following partial summary judgment and a
jury trial in favor of Oki Electric Industry Co., Ltd. (“Oki”) in Navcom’s diversity
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Stephanie Dawn Thacker, Circuit Judge for the United
States Court of Appeals for the Fourth Circuit, sitting by designation.
action alleging breach of contract and other claims. We have jurisdiction pursuant
to 28 U.S.C. § 1291 and affirm.
1. The district court did not err in ruling that Oki had the right to terminate
under Section 1.0 of the agreement. The plain language of Section 1.0 -- a provision
negotiated by two sophisticated business entities -- gives Oki the right to terminate
the agreement subject to Section 1.0’s three-month notice requirement. Section 1.0
applies “for purposes of ASIC (Applications Specific Integrated Circuit)
development” and states that the right to terminate may be exercised by either party
at least three months “prior to the expiration of any then current term.” E.R. 103
(emphases added). Section 1.0 is consistent with Section 2.7 of the agreement.
Section 2.7 simply grants Navcom an additional, more generous termination right
during the Development Phase. Nothing in the text of Section 2.7 suggests that it
was intended to limit Oki’s termination rights under Section 1.0.
2. The district court did not improperly disregard Navcom’s proffered
extrinsic evidence. Under California law, “[a]lthough extrinsic evidence cannot be
used to add to, detract from, or vary the terms of a written contract,” if the text of
the contract is “fairly susceptible of two interpretations, then extrinsic evidence
relevant to prove either interpretation will be allowed.” Zenger-Miller, Inc. v.
Training Team, GmbH, 757 F. Supp. 1062, 1067 (N.D. Cal. 1991) (citing Pac. Gas
& Elec. Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d 641, 645–46 (Cal.
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1968)). In this case, even after considering Navcom’s proffered extrinsic evidence,
the text of the agreement remains unambiguous and not reasonably susceptible to
Navcom’s asserted interpretation. Indeed, this evidence does not reveal a hidden
ambiguity or “show ‘what [the parties] meant by what they said’” in the agreement;
instead, it attempts to “vary or modify the terms of the agreement . . . to show that
the parties meant something other than what they said.” Denver D. Darling, Inc. v.
Controlled Env’ts Constr., Inc., 108 Cal. Rptr. 2d 213, 223 (Ct. App. 2001)
(emphases omitted) (quoting Assoc. Lathing & Plastering Co. v. Louis C. Dunn, Inc.,
286 P.2d 825, 828 (Cal. Dist. Ct. App. 1955)). This is not a permissible use of
extrinsic evidence.
3. The jury’s verdict, finding that Oki did not breach the agreement, was
supported by substantial evidence. As we have held, “[s]ubstantial evidence is
evidence adequate to support the jury’s conclusion, even if it is also possible to draw
a contrary conclusion from the same evidence.” Johnson v. Paradise Valley Unified
Sch. Dist., 251 F.3d 1222, 1227 (9th Cir. 2001). In upholding the jury’s verdict, the
district court concluded that there was legally sufficient evidence for the jury to find
that Navcom failed to prove that it satisfied its performance obligations under the
agreement, an essential element of its claim for breach of contract. We agree. Under
the terms of the agreement, Navcom’s third and final $150,000 payment to Oki was
due “upon delivery of Engineering Prototypes.” The agreement did not condition
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this final payment upon delivery of acceptable or final prototypes. Accordingly, the
jury could have reasonably found that Navcom’s obligation to make the third
payment was triggered when Oki delivered engineering prototypes, whether or not
they were accepted as the final prototypes. Because it is undisputed that Navcom
never made the final payment to Oki, even though Oki had delivered two sets of
prototypes before terminating the agreement, there was legally sufficient evidence
for the jury to find that Oki did not breach the agreement.1
4. Because the jury’s verdict was supported by substantial evidence, the
district court’s denial of Navcom’s motion for judgment as a matter of law must also
be affirmed. See Gilbrook v. City of Westminster, 177 F.3d 839, 856 (9th Cir. 1999)
(“The standard of review for the denial of a motion for judgment as a matter of law
after a jury trial is the same as the standard of review for reviewing a jury’s verdict:
‘both the verdict and the denial of the motion must be affirmed if there is substantial
evidence to support the verdict.’” (quoting Landes Constr. Co. v. Royal Bank of
Can., 833 F.2d 1365, 1370–71 (9th Cir. 1987)). For the same reasons, the district
court did not abuse its discretion in denying Navcom’s motion for a new trial. See
id. (“[W]e review for abuse of discretion the district court’s denial of a motion for a
new trial grounded on the assertion that the jury’s verdict was against the clear
1
In light of this conclusion, we need not address the parties’ additional
arguments concerning the jury’s verdict.
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weight of evidence.”).
AFFIRMED.
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