Navcom Technology, Inc. v. Oki Electric Industry Co, Ltd.

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 5, 2018
• Docket: 17-16446
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 5 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT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.

2 17-16446 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

3 17-16446 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.

4 17-16446 weight of evidence.”).

AFFIRMED.

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