Consortium Information Services, Inc. v. Credit Data Services, Inc.

149 F. App'x 575

Opinions

MEMORANDUM

Footnotes

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Credit Data Services, Inc. (“CDS”), appeals the district court judgment, following a bench trial, and $1.2 million damage award to Consortium Information Services, Inc. (“Consortium”) on a claim of promissory estoppel. Consortium cross-appeals, challenging the damage award as inadequate. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

I. Choice of Law

The district court correctly determined that the law of the forum state, California, as opposed to Florida law governs this action. ‘We review[] decisions concerning the appropriate choice of law de novo.” Gen. Signal Corp. v. MCI Telecomms. Corp., 66 F.3d 1500, 1505 (9th Cir.1995). CDS failed to timely assert the Florida statute of frauds as a defense. Federal Rule of Civil Procedure 8(c) lists “certain matters that a party must plead affirmatively, among which matters is the defense of the Statute of Frauds.” Morgan Elec. Co. v. Neill, 198 F.2d 119, 122 (9th Cir.1952). “Failure to plead this defense results in waiver of it” under Rule 12(h). Id. CDS raised the California statute of frauds in its answer to Consortium’s complaint, and relied upon California law in its summary judgment papers. It did not raise the Florida statute of frauds as a defense until oral argument on its summary judgment motion a year and three months after the suit was initiated. Because CDS failed to timely assert the Florida statute of frauds, under federal procedural law, it was precluded from asserting it so late in the litigation.

Although the district court concluded that CDA was equitably estopped from raising the Florida statute under California law, we may “affirm on any ground supported by the record even if it differs from the rationale of the district court.” Nat’l Wildlife Fed’n v. United States Army Corps of Eng’rs, 384 F.3d 1163, 1170 (9th Cir.2004). We need not reach the district court’s alternative holding that the “governmental interests” test leads to the same result.

II. Promissory Estoppel

The district court made extensive factual findings, none of which is clearly erroneous, and correctly concluded that CDS was bound by the California doctrine of promissory estoppel to compensate for the injury to Consortium by its failure to live up to the promises it made, upon which Consortium relied to its detriment. California law provides that “[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee ... and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Kajima/Ray Wilson v. Los Angeles County Metro. Transp. Auth., 23 Cal.4th 305, 96 Cal.Rptr.2d 747, 1 P.3d 63, 66 (2000). As the district court pointed out, CDS reasonably should have expected its promises to induce Consortium’s reliance because CDS (1) promised Consortium to reduce the agreement to writing, (2) continually assured Consortium that the parties had a deal, (3) knew that Consortium had a limited time to find a new credit report provider, and (4) insisted that Consortium begin performance before the contract was reduced to writing. Consortium reasonably relied upon CDS’s promises, to its detriment, by (1) discontinuing its search for another vendor, (2) acquiring a line of credit from the bank, and (3) informing its customers that their accounts were being transferred to CDS. As a result of CDS’s actions, Consortium lost its book of customers, was, in essence, forced to turn over its customer base to CDS without payment, and was unable to enter into another contract because it lost all its vendors. Thus, the district court correctly determined that promisory estoppel applied because the resulting “injustice can be avoided only by enforcement of the promise” made by CDS. Glen Holly Entm’t, Inc. v. Tektronix, Inc., 100 F.Supp.2d 1086, 1095 (C.D.Cal.1999).

III. Amount of Damages

The district court did not clearly err in awarding $1,288,226 in damages. “We review the district court’s computation of damages following a bench trial for clear error.” Howard v. Crystal Cruises, Inc., 41 F.3d 527, 530 (9th Cir.1994). The usual remedy in promissory estoppel cases is enforcement of the promise, and the damages are measured by the extent of the obligation assumed and not performed. 1 Witkin, Summary of California Law, Contracts § 250 (9th ed. Supp.2004). California law authorizes “the exercise of judicial discretion in promissory estoppel cases to fashion relief to do justice.” Signal Hill Aviation Co. v. Stroppe, 96 Cal. App.3d 627, 158 Cal.Rptr. 178, 186 (1979). The district court correctly calculated that if CDS had performed its part of the bargain, Consortium would have continued to sell credit reports at the rate and the rate of growth at which the company had previously been selling for a net profit of $.45 per report. As a result of losing its book of business in reliance upon CDS’s promises, after August 18,1999, until May 2001, when Consortium was able to find another vendor but was barred by Experian’s actions from entering into the business, Consortium suffered reliance damages of $1,288,226. The district court acted well within its broad equitable discretion to award damages through April 2001.

AFFIRMED.

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.