Clark v. Zellet CA2/6 ( 2014 )

Filed 9/22/14 Clark v. Zellet CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.111.5.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
WAYNE CLARK et al., 2d Civil No. B251728
(Super. Ct. No. 1381521)
Plaintiffs and Respondents, (Santa Barbara County)
v.
DONN ZELLET,
Defendant and Appellant.
Donn Zellett appeals from a judgment confirming an arbitration award for
$376,418 damages in favor of Wayne Clark and SportFence International, Inc., a
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Colorado Corporation. (Code Civ. Proc., §§ 1286; 1294. subd. (d).) Zellet contends
that the arbitrator exceeded her powers in calculating damages and the superior court
erred in not correcting the award. (§ 1286.6.) We affirm.
Facts and Procedural History
SportFence is a plastic, breakaway fence panel used for sporting events. It
is manufactured and sold under the trademark SportFence which is owned by Wayne
Clark.
In 2006, Clark sued Zellet for patent and trademark infringement. In May
2008, they entered into a settlement agreement providing that Zellet would stop
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All statutory references are to the Code of Civil Procedure.
manufacturing SportFence. Zellet agreed not to market or sell SportFence products not
manufactured by Clark and agreed not to use special dies to manufacture SportFence
parts.
After the settlement agreement was executed, Zellet continued
manufacturing and selling SportFence but placed no purchase orders with Clark. Zellet
repudiated the settlement agreement and, in 2011, instructed a vendor (Barnes Plastic) not
to sell patented parts to Clark. In 2012, Zellet changed the name of his company from
SportFence to Best Portable Fence and continued to reference SportFence on his website.
Clark sued for injunctive relief and contract damages. On February 2,
2012, the Santa Barbara Superior Court ordered the matter to arbitration and issued a
preliminary injunction enjoining Zellet from: (1) manufacturing plastic portable fencing
using certain die parts, and (2) selling or offering for sale portable plastic fencing under
the name "SportFence" except for fencing purchased from Clark.
JAMS Arbitrator Nancy J. Warren found that Zellet breached the settlement
agreement when he continued to manufacture, market, and sell SportFence without
ordering the fence product from Clark. The arbitrator also found that Zellet used
patented parts in direct violation of the settlement agreement and the preliminary
injunction. Clark was awarded $376,418 damages plus $59,544.58 attorney's fees and
costs. The arbitrator found that Clark was entitled to a permanent injunction prohibiting
Zellet from manufacturing SportFence or selling SportFence products not manufactured
by Clark.
On June 26, 2013, the superior court granted Clark's petition to confirm the
arbitration award and denied Zellet's request to correct the award. (§ 1286.6.) A
$523,154.90 judgment was entered against Zellet consisting of $376,418 damages,
$87,192.32 prejudgment interest, $46,124.80 attorney fees and $13,419.78 costs.
Standard of Review
In determining whether the arbitrator exceeded her powers, we review the
superior court's order de novo and give substantial deference to the arbitrator's award.
(Advanced Micro Devices, Inc.. v. Intel Corp. (1994) 9 Cal. 4th 362, 376, fn. 9.) Judicial
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review of private, binding arbitration awards is generally limited to the statutory grounds
for vacating (§ 1286.2) or correcting (§1286.6) an award. (Moshonov v. Walsh (2000)
22 Cal. 4th 771, 775.) A court may correct the award if the arbitrator exceeded his or her
authority (§ 1286.6, subd. (b)) or the arbitrator made an "evident miscalculation of
figures . . . ." (§ 1286.6, subd. (a).) "The miscalculation, to be evident, must appear on
the face of the award [citation] or be so readily apparent from the documentation in the
case that explanation by proofs is not necessary." (Severtson v. Williams Construction
Co. (1985) 173 Cal. App. 3d 86, 94.)
Damages
Zellet argues that the superior court erred in not reducing the damage award
from $376,418 to $30,448.40. The arbitrator calculated damages by totaling Zellet's
gross sales receipts and subtracting documented production costs. Zellet argues that
damages should be the difference between what Clark would have charged ($93.04 per
fence unit), less Clark's manufacturing cost ($80 per unit). Based on Zellet's calculation
(Zellet sold 2,335 fence panels x $13.04 net profit per panel), Clark's damages total
$30,448.40.
The argument fails because Zellet was ordered to produce records of the
manufacturing and production costs but refused to do so. The arbitrator found that
"Zellet cannot refuse to produce documents and then complain that the damages cannot
be clearly ascertained or calculated with reasonable certainty." The alleged "mistake" in
the computation of damages was created by Zellet. The arbitrator found that the invoice
totals for the sale of SportFence was $417,966 and subtracted the documented
manufacturing costs ($41,547.79), which netted $376,418 damages.
Zellet claims there are other manufacturing costs but declined to produce
the invoices and records. The superior court found that the arbitrator "dealt with the
documentation that was provided. She felt that [Zellet] was not forthcoming in terms of
providing the documentation . . . and, essentially, that's [Zellet's] fault."
Zellet claims that the documentation was not required because the parties
already "possessed [the] numbers." He argues that the unauthorized sales were a windfall
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to Clark who lacked a manufacturing facility and customer base. Zellet, however, is
precluded from retrying the case. The appeal is based on the theory that the arbitrator
should have calculated damages based on Clark's manufacturing costs. The superior
court rejected argument because it "ignores the fact that [Clark's] costs certainly would
have been much lower and his sales much higher had [Zellet] not actively competed with
him for customers. Also, [Zellet] needed to raise this argument when he sought to have
the arbitrator correct her award . . . . Instead, [Zellet] only asked the arbitrator to correct
the injunction language to make clear which molds [and dies] he was permitted to use."
The arbitrator found that Zellet manufactured and sold SportFence in direct
violation of the settlement agreement and preliminary injunction. Zellet was ordered to
produce records of the manufacturing costs but refused to do so. "No one can take
advantage of his own wrong." (Civ. Code, § 3517.) Zellet cites Civil Code section 3301
for the rule that contract damages must be clearly ascertainable. The corollary to this rule
is that "[o]ne whose conduct has rendered difficult the ascertainment of . . . damages
cannot escape liability because the damages could not be measured with exactness.
[Citations.]" (Zinn v. ExCell-O Corp. (1944) 24 Cal. 2d 290, 297-298.) The arbitrator did
not exceed her powers in concluding that Zellet engaged in illegal competition and was
liable for gross sales minus documented manufacturing costs.
Sanctions
Clark seeks an award of $7,000 sanctions for what he characterizes as a
frivolous appeal. (§ 907; Cal. Rules of Court, rule 8.276(a)(1).) An appeal is frivolous
only "when it is prosecuted for an improper motive - to harass the respondent or delay the
effect of an adverse judgment - or when it indisputably has no merit - when any
reasonable attorney would agree that the appeal is totally and completely without merit.
[Citation.]" (In re Marriage of Flaherty (1982) 31 Cal. 3d 637, 650.)
The record fails to show that Zellet or his former attorney filed the appeal
for improper reasons. While the contentions on appeal are weak, we cannot say they are
totally and completely without merit.
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The judgment (order confirming arbitration award) is affirmed. Clark is
awarded costs on appeal.
NOT TO BE PUBLISHED.
YEGAN, J.
We concur:
GILBERT, P.J.
PERREN, J.
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James Herman, Judge
Superior Court County of Santa Barbara
______________________________
Donn Zellet in pro per, Appellant.
Richard J. Wideman, for Respondent.
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