CORBIS CORPORATION v. STONE
Court of Appeals of Washington, Division One.
Filed: March 26, 2012.
Additionally, the Development Agreement was a fully integrated document, and "constitute[d] the entire agreement between the Parties . . . supersed[ing] any and all prior and contemporaneous agreements or communications with respect to such subject matter."
The Development Agreement required InfoFlows to first produce a specification of each phase of the system, then build and deliver an "alpha" version of the system, and then a final version of the system, all subject to Corbis' approval. Corbis had the right to accept or reject InfoFlows' delivered product at Corbis' sole discretion. If Corbis rejected a delivered product, it could terminate the Development Agreement for cause or require that InfoFlows correct and resubmit. According to Corbis, it "rejected InfoFlows first delivery of functional specifications because it had failed to meet Development Agreement milestones." Corbis then gave InfoFlows an opportunity to "correct the problems," but InfoFlows "failed to deliver a working `alpha' demonstration of the system[,]" and as such Corbis terminated the Development Agreement on October 12, 2006.
At trial, however, Tanya Miksys (a Corbis-hired consultant) testified that InfoFlows had, in fact, met the alpha delivery date. Counsel for InfoFlows introduced a September 20, 2006 email from Miksys to Weiskopf and others. That email attached a Boulder Ridge "status report". The report states, "InfoFlows met the [A]lpha delivery due date and a review meeting was held. All deliverables were acceptable, although the Corbis Technical Lead will continue to review the deliverables in detail to validate that the project is on track." Given Corbis terminated the Development Agreement, Corbis and InfoFlows never entered into a Jazz Services Agreement.
Lawsuits.
In January 2007, InfoFlows announced the "Fedmark" license management system on its website. Corbis believed that Fedmark went beyond the scope of the Jazz Services clause in the Development Agreement, and that InfoFlows had taken Boulder Ridge license management design documents, re-labeled them, and was offering a product to the public based on work product generated while InfoFlows was working with Corbis.
Corbis and InfoFlows sued each other on January 22, 2007. Corbis alleged misappropriation of trade secrets, breach of contract, and unfair business practices. InfoFlows alleged misappropriation of trade secrets, conversion, breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment, and fraud. The cases were consolidated. The trial court granted Corbis' motion for partial summary judgment seeking return of the $500,000 Jazz Service advance fee. The court also granted Corbis' motion for partial summary judgment as to the "unambiguous" definition of "Jazz Service" in the Development Agreement. That order reads in pertinent part:
(2) The definition of "Jazz Service" is not ambiguous and can be determined by the Court from the Development Agreement between the parties; and
1. Although InfoFlows now argues it "never claimed" it should be awarded damages for "lost profits", or for lost opportunities, counsel did argue during closing that the jury could award damages for lost business opportunities on the inducement claim.
2. Corbis' argument that damages award for fraudulent misrepresentation is inconsistent with the award for fraudulent inducement is also well taken. The instructions permitted the jury to award InfoFlows damages for fraudulent inducement to compensate InfoFlows other business opportunities it would have had had it not entered into the Development Agreement with Corbis. But the jury also awarded InfoFlows damages for the value of the company had Corbis and InfoFlows coordinated on patent applications, including patents for the Jazz Service. The award for misrepresentation "admits" the existence of Jim Mitchell's promise to work together on patents, while the award for fraudulent inducement "denies" the existence of the promise, given Stone testified he would not have entered into an agreement with Corbis had he known about the secret patent. See Batcheller, 9 Wn.2d at 404. Thus, these two awards are also "inconsistent" and amount to a double recovery. Melby, 13 Wn. App. at 749.
3. Stone's deposition testimony regarding InfoFlows' damages for its lost business opportunities was read to the jury as follows:
Q: I asked you a question a line four, `Have any of the misrepresentations you told me, told me about this afternoon, caused money damages to InfoFlows?"
There's an objection by Mr. Willey.
And you say, `If I — had I known that Corbis had filed a patent, I would have terminated the relationship. I would have gone a different direction. Instead of a relationship with Corbis funding the jazz service, I would have probably gone the investment route. I would have developed or InfoFlows would have developed a company. In that fashion it's hard to project where we'll be two and a half years later, this being mid 2008, us terminating the relationship in early 2006.
"`So I believe we would be materially further ahead. Where on that plan we would be right now, it's hard for me to gauge'"
I say, `All right [sic], can you quantify this, where the difference between where you are now and where you would have been if you'd never entered into the development agreement in money and dollars?' There's another objection.
You say, `I haven't done that analysis yet. I could probably quantify it, but I don't have a number right now.'
I ask you, `How would you go about it?'
`I would need to think about how I would go about it, so I don't want to know right off — I don't know right off the top of my head.'
`So had you not continued the relationship with Corbis, you think you would have been funded by one of the venture groups that you visited with?'
Answer: `I believe so, yes.'
`Which one?' There's another objection.
`It's unknown to me which one, I don't know.'"
4. See Response Brief at 47 (citing Ali v. Fastners for Retail, Inc., 544 F.Supp.2d 1064 (E.D. CA 2008).