Opinion
B156858.
11-7-2003
BIS COMPUTER SOLUTIONS, INC., Plaintiff and Appellant, v. HITACHI DATA SYSTEMS CORPORATION, Defendant and Appellant.
Edwin Carney for Plaintiff and Appellant. Greenberg Traurig, Philip R. Sellinger, Helen E. Kleiner, Charles M. Auslander, Paul C. Savage, Julissa Rodriguez; Loeb & Loeb, Daniel J. Friedman and Martha Sharp for Defendant and Appellant.
INTRODUCTION
Plaintiff and appellant BIS Computer Solutions, Inc. (BIS or plaintiff) appeals the judgment following a jury verdict in favor of defendant Hitachi Data Systems Corporation (defendant or Hitachi) and the order denying its motion for new trial. Plaintiff asserts that during jury deliberations, the trial court improperly communicated with, and instructed, the jury through the court bailiff and that this irregularity resulted in actual prejudice to plaintiff.
We reverse the judgment in favor of Hitachi and the trial courts denial of plaintiffs motion for a new trial. The trial court erred by communicating with the jury through the bailiff, which resulted in actual prejudice to plaintiff. On remand, we instruct the trial court to enter a new and different order granting plaintiffs motion for a new trial.
Defendant cross-appeals the trial courts denial of its motion for a directed verdict. We affirm. There was sufficient evidence for plaintiffs claims to go to the jury.
STANDARD OF REVIEW
This case turns in large part upon whether plaintiff presented substantial evidence in support of its claims. The record indicates that after the trial court instructed the jury through the bailiff, the jury stopped deliberating on plaintiffs cause of action for breach of the implied covenant of good faith and fair dealing and never deliberated on the quantum meruit and fraud causes of action. Thus, whether plaintiff was prejudiced depends upon whether plaintiff presented substantial evidence in support of these causes of action.
Moreover, in GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, the Court of Appeal explained the standard of review pertaining to instructional error: "Significantly, our standard of review in this regard is the opposite of the traditional substantial evidence test. `"[I]n assessing an instructions prejudicial impact, we cannot use the view of the evidence and inferences most favorable to the [prevailing] party. . . . Instead, we must assume the jury might have believed [plaintiffs] evidence, and, if properly instructed, might have decided in [plaintiffs] favor. [Citations.]" . . . Accordingly, we state the facts most favorably to the party appealing the instructional error alleged[.]" (Id. at p. 423; see also Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 674.)
Additionally, defendant is cross-appealing the trial courts denial of its motion for a directed verdict. If plaintiff presented substantial evidence in support of its claims, and the law supports those claims, we must affirm the denial of defendants motion for directed verdict. Additionally, all conflicts and ambiguities must be resolved, and all inferences drawn, in plaintiffs favor. (Margolin v. Shemaria (2000) 85 Cal.App.4th 891, 895.)
FACTUAL AND PROCEDURAL BACKGROUND
A. The Fulton County Project
Plaintiff, BIS, was owned by Miro Macho. Since the early 1980s, plaintiff was in the business of selling integrated justice information software to local governments, public safety and court markets.
By its complaint, plaintiff alleged that defendant and plaintiff entered into a joint venture to provide justice information software to Fulton County, Georgia. Plaintiff alleged that after defendant used plaintiffs services to win the major portion of the Fulton County contract, defendant intentionally cut plaintiff out of the deal.
This case was submitted to the jury on four causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) fraud; and (4) quantum meruit. Resolving all reasonable ambiguities, inferences and conflicts in favor of plaintiff, the evidence at trial presented the following.
Sometime in the late 1990s, Fulton County became interested in purchasing a Comprehensive Justice Information System (CJIS) to integrate the record keeping and document management functions of its law enforcement and justice agencies. Fulton County issued a Request for Proposal (RFP), pursuant to which it solicited bids for the CJIS.
In 1998, defendant approached plaintiff about the possibility of providing a bid in response to Fulton Countys RFP. Defendant had no experience with CJIS and was interested in plaintiff because of plaintiffs experience in bidding and installing CJIS projects. Macho told defendant that plaintiff had already been approached by non-party IBM in relation to the Fulton County project. Plaintiff and IBM had previously partnered on another account.
It was anticipated that Fulton County would request any CJIS to be in Oracle format, which allowed for a graphical screen, as opposed to a simple green screen. Macho told defendant that plaintiff was in the early stages of reengineering its software into an Oracle database. Neither defendant nor Fulton County considered this to be a problem because the project had a three-year time line, allowing sufficient time for the reengineering.
About plaintiffs ability to reengineer to an Oracle format, Fulton Countys IT Director at that time, John Rowan, testified: "I had at that time, Michael Robinson, who was then vice president of Hitachi, assure me that [plaintiff] would be Oracle ready . . . based upon the Countys schedule of implementation. I knew and I had every reason to trust Michael Robinson. [¶] . . . [¶] But [defendant], also, had Oracle on their team, not just the database people but the services component of Oracle. So . . . I really wasnt very worried about it." Rowan also explained that defendant had to provide a performance bond, "[s]o if there [were] any doubts in [my] mind that [plaintiff] could not perform in an Oracle environment, that would have cost [defendant] a lot of money, and I dont think they would have proceeded to do that."
Prior to submitting a bid to Fulton County, two of defendants vice-presidents, Michael Robinson and James Glick, visited Macho and invited plaintiff to be part of defendants CJIS team, along with four other companies. Plaintiff was the only software provider of the five CJIS team members. Robinson represented to Macho that if plaintiff joined the team and defendant won the Fulton County contract, then plaintiff would be the software provider and installer. Based upon these representations, plaintiff agreed to join defendants CJIS team, and to forego any opportunities with IBM.
Macho testified: "We basically made a commitment to each other. [¶] When Robinson and Glick were out, they committed to me that if we joined that we would be on their team and, of course, if we joined that we, obviously, would install the system."
Fulton County formally issued its Request for Proposal in July 1998, which provided in pertinent part that "[b]y submitting a signed proposal, [defendant] agrees to accept an award made as a result of the submission of the prices and terms contained in that proposal. . . . [Defendant] understands and agrees that the proposal, specifications, provisions, and the terms and conditions of the RFP become a valid contract between Fulton County and the [defendant] upon notice of award of contract in writing and/or issuance of a purchase order." Additionally, the RFP required vendors, such as defendant, to set forth "[a]ll professional personnel, including subcontractors, [who would be] engaged in performing services" for the vendor and that "[n]o changes or substitutions shall be permitted in the Proposers key personnel as set forth [in the response] without the prior written approval of the Director of Information Technology or his designee." The RFP also required that the "[s]uccessful vendor must assume full responsibility for delivery of all goods and services proposed . . . ." Finally, in the RFP, Fulton County reserved the right to "award a contract based on this [RFP] and the proposal(s) received — in whole or in part — to one or several vendors."
Defendant submitted its response, called a Business Proposal, to Fulton Countys RFP on August 26, 1998. In its proposal, defendant introduced the CJIS team members: "[Defendant], acting as the Prime Contractor has assembled a team of partners to provide Fulton County with a `state of the art CJIS system. [Defendants] partners were selected based upon their reputations in the industry for providing quality products and services in a timely and financially responsible manner. . . . The members of the [defendants] CJIS Team include the following industry leading companies: [¶] . . . [¶] BIS Computer Solutions, Inc. — Justice Information System (JIS) Application." Defendants proposal also included a four-page profile of plaintiff, touting its accomplishments and expertise in the industry.
For example, defendant wrote: "BIS Computer Solutions, Inc.[,] an extremely successful computer systems organization, with a track record dating back to 1971, has the strength behind it of over fifty employees. BIS experience in quality computer systems is evidenced by BIS 700 installations in diverse industries. . . . [¶] BIS provides the most integrated Criminal Justice Information System (CJIS) in the market place." (Emphasis in original.) The Proposal also stated that "[u]ser satisfaction is extremely high." (Emphasis in original.) Finally, the proposal identified plaintiffs key personnel, and described its operations, as well as the products and services provided by plaintiff.
Plaintiff was the only software provider proposed by defendant. Defendants bid to Fulton County was based, in part, upon the pricing that plaintiff provided defendant for its software.
Fulton County considered the proposal and demonstrations of three potential vendors, defendant, IBM and Price Waterhouse for approximately five months, from August 1998 to January 1999. During the review process, Fulton Countys IT Director, John Rowan, told defendants vice-president, Robinson, who told Macho, that, for its criminal courts, Fulton County preferred one of the products offered by IBMs team member, SCT. Robinson told Macho that defendants CJIS team would have a significantly greater chance of winning the bid if plaintiff agreed to forego this portion of the contract. Robinson asked Macho if plaintiff would accept this compromise. Macho agreed on behalf of plaintiff. Rowan testified that at this point, he understood that defendant would be using plaintiffs software for its portion of the split award, to prevent any unknowns, and to ensure "predictable costs [and] predictable technical risk" in order to protect the taxpayers money.
After agreeing to the split award and certain price reductions, in mid-November 1998, defendant submitted a best and final offer (BAFO) to Fulton County. In the BAFO, defendant identified plaintiff as its only CJIS software provider.
As Fulton Countys IT Director, Rowan was solely responsible for making a recommendation of the CJIS contract to the County Manager and the Board of Commissioners. In the end, Rowan recommended a dual award, with defendant winning everything except certain courts, which went to IBM for the SCT software. In making the recommendation, Rowan understood that plaintiff would provide all software, except the SCT product for certain courts. Rowan never intended a $17 million contract to be awarded to defendant based upon software to be provided by an unidentified and undemonstrated provider.
On January 29, 1999, defendant e-mailed the CJIS team, including plaintiff, anticipating that the Board was going to award defendant part of the CJIS contract: "To that end, CJIS will be awarded as a dual award to [defendant] and IBM. [Defendant] will provide everything that we bid on except for [the] criminal case management. This portion of the award will go to IBM for the SCT Banner Court System. [Defendant] is the prime on this engagement."
On February 3, 1999, the Board of Commissioners approved Rowans recommendation. At the time the award was made, defendants IT Director, Rowan, testified he expected defendant to supply plaintiffs software, because "its the only application software company that they ever presented to the County. [¶] . . . [¶] . . . So my expectation was thats what we were buying."
After the award was made, Macho received a call from either Mary Cheatam, defendants project manager in charge of the Fulton County Project, or Lisa Honig, defendants sales person responsible for the Fulton County project, to inform plaintiff that the award had come through. Cheatam or Honig then told Macho that Robinson would visit plaintiff in two to three weeks "to lay out the foundation for how to proceed on the remaining products." Robinson never arranged a visit to plaintiffs facilities.
After receiving the award, defendant failed to include plaintiff in its first team meeting to discuss integration, or its celebratory party during which defendant signed subcontracts with all team members, except plaintiff.
In March 1999, defendant then submitted a Statement of Work, which was a blueprint for the work to be performed. The Statement of Work failed to include plaintiff. In places where Rowan expected to find plaintiff identified, defendant listed other software providers or wrote, "open at this time," meaning the provider was yet to be determined. Rowan testified that he signed the document without reading it, testifying at trial that the Statement of Work did "not reflect what I thought the County was buying at the time of the award. [¶] . . . [¶] It was a split award. Only the superior court software was to go to IBM-SCT."
Likewise, Rowan denied that defendants Robinson ever told him that defendant had changed its team members.
Plaintiff assumed that defendant was busy with the first stages of the three-year implementation. Plaintiff did not expect to begin installing its software until later in the year. By early 2000, plaintiffs phone calls and letters to defendant went mostly unanswered. However, in December 1999, Robinson called Macho to inform him that they were finishing the criminal court piece and that they were almost ready to get started on the software to be provided by plaintiff.
Then, on May 31, 2000, Robinson wrote Macho to inform him that software from other providers had been installed, and plaintiff was not involved as originally intended. Robinson did not provide a reason as to why the software of other providers had been selected.
On behalf of plaintiff, Macho testified that he was never told why plaintiff had been excluded from the Fulton County project until after the lawsuit was filed. At that point, through discovery, defendant indicated that the decision not to use plaintiffs software came from the County, not defendant.
At trial, plaintiffs counsel asked Rowan as to whether Fulton County had rejected plaintiffs software: "Yesterday, [defendants sales person] Lisa Honig testified through her deposition that you told [defendant] that you did not believe that [plaintiffs] application suite would meet the needs of the County. [¶] All right. Did you ever say that to anyone at [defendant]?" Rowan responded: "Never. Never said that about any company." Plaintiffs counsel then asked: "Excluding the superior court software that is going . . . to IBM-SCT, did you ever tell anyone at [defendant] that they could not use [plaintiffs] software?" Rowan answered: "No."
On this point, defendants salesperson, Honig, testified that at the time of the split award, Fulton County selected the court applications to be provided by SCT. Honig testified that as to the portion of the contract awarded to defendant, Fulton County did not select any of plaintiffs software, but instead, left open the issue of who would provide the remainder of the software applications. Rowan testified this was inaccurate, that he would never have left such a loose end in the bid process and that he expected defendant to provide plaintiffs application software.
Rowan also denied that defendant ever asked to change some of the subcontractors on its team. On this point, plaintiffs counsel asked: "Now, if once an award is made to a prime . . . if the prime were to desire to change one of his subcontractors that he had listed on his proposal . . . that company would have to come to the IT Director and seek permission. [¶] Correct?" Rowan answered: "Correct."
Plaintiff presented evidence that it lost profits of $3.9 million. Plaintiff also presented evidence that it expended $168,500 in helping to draft defendants response to Fulton Countys RFP, as well as participating in meetings, site visits, demonstrations and oral presentations. Plaintiff calculated its expenses as follows: 1,000 hours at $150 an hour equals $150,000, plus $18,500 in travel and out-of-pocket expenses.
Two days after defendant submitted its response to Fulton Countys RFP, Honig and Robinson wrote Macho to thank plaintiff and all the team members for their hard work, stating: "[t]he time and dedication that you put into this effort [was] reflected in the quality of [the] response."
B. Jury Instructions
As explained below, this case concerns the trial courts explanation to the jury about the relationship between a cause of action for breach of contract and a cause of action for breach of the implied covenant of good faith and fair dealing. At this point, we identify the instructions the trial court gave concerning the elements necessary to show a breach of the covenant of good faith and fair dealing.
After instructing the jury as to the elements necessary to prove fraud and breach of contract, the trial court instructed the jury pursuant to modified BAJI Jury Instruction No. 10.05, as follows: "[Plaintiff] seeks to recover damages based upon a claim of breach of the implied covenant of good faith and fair dealing, arising out of the agreement [plaintiff] contends it had with [defendant]. [¶] The essential elements of such a claim are: [¶] One: There was an agreement between [plaintiff] and [defendant]; [¶] Two: [Plaintiff] performed its part of the agreement, unless excused; [¶] Three: [Defendant] engaged in conduct separate and apart from the performance of obligations under the agreement without good faith and for the purpose of depriving [plaintiff] of rights and benefits under the agreement. [¶] Four: Such conduct caused [plaintiff] to suffer injury, damage, loss, or harm."
The trial court also instructed the jury pursuant to modified BAJI Jury Instruction No. 10.35, as follows: "In every agreement there is an implied obligation of good faith and fair dealing upon each party to the agreement that neither party will engage in conduct for the purpose of denying to the other the benefits of the agreement. If any party to the agreement violates that obligation, that party is in breach of the agreement and is liable for damages."
C. The Jurys Questions and the Trial Courts Response
During deliberations, the jury submitted two written questions to the trial court: "If the jury finds in favor of the defendant relating to Breach of Contract, can we also find in favor of the plaintiff for the covenant of good faith[?] [¶] Are the (2) charges independent of each other[?]"
Without informing counsel of the jury questions, the trial court instructed the bailiff to answer the first question: "No." The trial court did not recall the bailiff asking the second question.
Approximately 20 minutes after receiving the trial courts response from the bailiff to its legal questions, the jury returned a general verdict by a vote of 9 to 3 in favor of defendant. The trial court then excused the jury.
Interviewing jurors in the hallway after the verdict, plaintiffs counsel learned for the first time that the jury had asked substantive legal questions during deliberations and that the trial court had answered the questions. Plaintiffs counsel returned to the courtroom and immediately objected to the procedure.
The trial court denied plaintiffs objections. As to the jurys first question, the trial court explained: "It seems to me theyre totally intertwined. If you dont have a contract or [breach] of contract, you cant have a [breach] of covenant of good faith deal." About the second question, which the trial court did not recall the bailiff asking, the trial court remarked: "Im not quite sure what that means. It seems to me that the same answer would apply."
D. Plaintiffs Motion for a New Trial
Plaintiff moved for a new trial on the grounds of an irregularity in the proceedings. (Code. Civ. Proc., § 657, subd. (1).) It is undisputed that the trial court did not inform plaintiff or its counsel about the jurys questions or its response until after the jury rendered its verdict. The parties had no opportunity to address the issues presented by the jurys questions, nor any chance to request clarifying instructions. Additionally, there is no official record as to what the bailiff told the jurors. The trial court did not conduct the jury into court to transcribe the communications to the jury in response to its questions.
In support of its motion for new trial, plaintiff submitted four juror declarations, three of whom voted in favor of defendant on the breach of contract cause of action. These declarations disclosed that after deliberating on the breach of contract cause of action, the jury found in favor of defendant by a vote of 9 to 3. The jury then started discussing the breach of the covenant of good faith and fair dealing, at which point, the jury presented its questions, quoted above, to the trial court.
The declarations show that in response to the jurys questions, the bailiff did not give a simple "no" answer. Instead, the bailiff stated something like, "It all goes one way," or "It only goes one way." Stated another way, the bailiff told the jurors that this was a single case and that the jury needed to make only one decision in favor of either the plaintiff or the defendant.
As a result of this communication from the bailiff, the jury stopped deliberating on the breach of the covenant of good faith and fair dealing cause of action and never deliberated on the fraud and quantum meruit causes of action. According to Pamela Winters, a juror who voted in favor of defendant on the breach of contract cause of action: "The jurys consensus was that based on the answer from the Judge further deliberation was not necessary since we had found in favor of [defendant] on the Breach of Contract charge."
Jan Reiz, another juror who voted in favor of defendant on the breach of contract cause of action, declared: "The jurors agreed that based on the answer from Judge Swart, further deliberations were not necessary. Since we had earlier found in favor of [defendant] for Breach of Contract, we believed that it did not matter what we decided on the charge of Breach of the Covenant of Good Faith and Fair Dealing because we jury believed, based on the bailiffs statement, that we had to find in favor of BIS on each and every cause of action for BIS to prevail. For the same reason, we concluded that it was not necessary to discuss the charge of Fraud or Quantum Meruit. We stopped deliberating on the Breach of the Covenant of Good Faith and Fair Dealing and never began deliberations on the fraud or quantum meruit causes of action."
In opposition, defendant submitted two declarations from jurors who voted in favor of defendant. These declarations indicated that after the bailiff answered the jurys questions, there was discussion about the entire case and a final 9 to 3 vote on all four causes of action in favor of Hitachi.
One of the declarations submitted by defendant in opposition to plaintiffs motion for new trial was from juror Leslie Wolff. Wolff also provided a declaration to plaintiff, which was filed as part of plaintiffs reply to defendants opposition. In her second declaration, Wolff declared that the bailiff did not give a simple yes or no answer to the jurys question because the jury asked the bailiff for clarification of his answer, which the bailiff provided, but Wolff could not recall. Contradicting her first declaration, Wolff then declared: ". . . [& para;] 6. The jurors agreed that based on the Bailiffs answer further deliberations were not necessary. We stopped deliberating on the Breach of the Covenant of Good Faith and Fair Dealing Cause of Action and never began deliberations on the fraud or quantum meruit causes of action. [¶] 7. We then discussed our thoughts of the Breach of Contract issue again and agreed to vote on our decision for the case. The result was three votes in favor of BIS and nine votes in favor of Hitachi."
The trial court denied plaintiffs motion. The trial court explained that it is the province of the court to instruct the jury on the law and that while the procedural error was unfortunate, it was harmless error. The court also explained: "In the context of this case, there cannot be a violation of the covenant of good faith and fair dealing where the jury has found, as they did, that there was no breach of contract."
Plaintiff filed a timely notice of appeal from the judgment and the trial courts order denying the motion for new trial. Defendant filed a timely notice of cross-appeal from the trial courts order denying its motion for a direct verdict.
CONTENTIONS
Plaintiff contends the trial court erred by denying its motion for a new trial. Defendant contends the trial court erred by denying its motion for directed verdict.
DISCUSSION
A. Procedural Error
Plaintiff asserts that the procedure employed by the trial court to answer the jurys questions constituted procedural error which resulted in actual prejudice to plaintiff. We agree. The trial courts communication with the jury through the bailiff constituted procedural error. In section B of the Discussion, below, we address issues relating to prejudice.
The authority of a trial court to grant a motion for new trial is governed by statute. (Bell v. State of California (1998) 63 Cal.App.4th 919, 929.) Code of Civil Procedure section 657 provides in pertinent part: "The verdict may be vacated . . . and a new or further trial granted on all or part of the issues, on the application of the party aggrieved, for any of the following causes, materially affecting the substantial rights of such party: [¶] 1. Irregularity in the proceedings of the court . . . by which either party was prevented from having a fair trial."
Code of Civil Procedure section 614 provides: "After the jury have retired for deliberation, . . . if they desire to be informed of any point of law arising in the cause, they may require the [bailiff] to conduct them into Court. Upon their being brought into Court, the information required must be given in the presence of, or after notice to, the parties or counsel." (Italics added.) As explained in Asplund v. Driskell (1964) 225 Cal.App.2d 705, "The requirements of this section, phrased in mandatory language, must be strictly complied with." (Id. at p. 712.)
Likewise, the Superior Court of Los Angeles County, Local Rules, rule 8.55 (Local Rule 8.55), applicable at that time, provided: "If the jury has a question regarding the case, the trial judge should instruct the foreperson to write the question and submit it to the court through the bailiff, court attendant or clerk. Upon receipt of the question, the trial judge should review it with counsel outside the presence of the jury, and discuss with them an appropriate answer to be given the jury. Such conference should be reported on the record. The answer to the question should be stated to the jury in open court and the written question should be made part of the record in the absence of a stipulation to the contrary."
After a jury retires to deliberate, failure to comply with Code of Civil Procedure section 614 constitutes an irregularity in the proceedings of the court pursuant to Code of Civil Procedure section 657, subdivision (1). (See Carlson, Collins, Gordon & Bold v. Banducci (1967) 257 Cal.App.2d 212, 230 ["A departure from these code provisions specifying the method of communication between the court and [the] jury has [long] been held to be an `improper irregularity going to the substance of the right to jury trial . . . . [¶] . . . The cases dealing with improper communications to the jury generally involve jury requests for information, answered by the court out of the presence of counsel. . . . [¶] The rationale underlying the requirement that the court must not answer jury requests for information out of the presence of counsel is clear—to afford counsel the opportunity of knowing on what theories and in what manner the jury is instructed."]; Nelson v. Southern Pacific Co. (1937) 8 Cal.2d 648, 655 ["Section 614 of the Code of Civil Procedure requires that, if the jury desire further instruction, it shall be conducted into court and the information desired given in the presence of or after notice to counsel. Any other method of communication is held to go to the substance of the right of trial by jury . . . ."]; People v. Rodriquez (1963) 213 Cal.App.2d 555, 560-561 ["That the procedure was highly irregular cannot be doubted. The jury should have been brought into court. . . . `Ordinary procedure would require that the trial judge afford the parties an opportunity to be apprised of any such communication and to have the opportunity to make timely objection to any action by the court or jury which might be deemed irregular. [¶] . . . An effort should have been made to procure the presence of the defense attorneys. The jurors should have been brought into court. The question should have been read aloud. If the attorneys had been present they should have been permitted to express their views to the court. Even the defendants, if counsel were absent, should have been given an opportunity to be heard."]; and Halada v. Venice Lake Park, Inc. (1955) 132 Cal.App.2d 788.)
In this case, in violation of section 614 of the Code of Civil Procedure and Local Rule 8.55, it is undisputed that neither plaintiff nor plaintiffs attorneys were aware of, or notified about, the jurys question or the courts response until after the jury rendered its verdict. The jury was not brought into court and no official record was made as to what the bailiff informed the jurors. Plaintiff was denied the right to object to the trial courts response to the jurys questions or otherwise seek to have the trial court offer clarifying instructions to the jury. This constituted error. The real issue in this case is whether this procedural error prejudiced plaintiff.
B. Prejudice
Plaintiff asserts that it was denied its fundamental right to a jury trial on the breach of implied covenant, fraud and quantum meruit causes of action and that this type of procedural error is per se prejudicial and no showing of actual prejudice is required. Alternatively, plaintiff asserts that it has shown actual prejudice resulting from the trial courts procedural error.
(For example, see Carlson, Collins, Gordon & Bold v. Banducci, supra, 257 Cal.App.2d at p. 230 ["A departure from these code provisions specifying the method of communication between the court and jury has been held to be an `improper irregularity going to the substance of the right to jury trial, and `because of its nature is deemed to be prejudicial except in very exceptional circumstances."]; and People v. Rodriquez, supra, 213 Cal.App.2d 555.)
Defendant contends that plaintiff must demonstrate actual prejudice. Defendant further asserts that plaintiff cannot show actual prejudice because plaintiff failed to present substantial evidence in support of its claims.
(For example, see Cal. Const., art 6, § 13; and People v. Aguilar (1963) 217 Cal.App.2d 260, 264 ["However, where the record fails to show any prejudice, a judgment need not be reversed on account of such an unauthorized communication."])
We need not resolve whether this type of procedural error constitutes per se reversible error because plaintiff has shown actual prejudice resulting from the trial courts communication with the jury through the bailiff. First, the trial courts instruction to the jury was an incomplete statement of the law and plaintiffs counsel should have been given the opportunity to be heard and seek to offer clarifying instructions.
Second, after the bailiff communicated with the jury, the record indicates the jury stopped deliberating on plaintiffs causes of action for breach of the covenant of good faith and fair dealing and never deliberated on the fraud and quantum meruit causes of action. Thus, the issue of prejudice is dependent, in part, upon whether plaintiff presented substantial evidence in support of these causes of action. In other words, "[i]f there is a `reasonable probability the jury would have reached a different result with proper instruction, we must conclude the verdict was prejudicially affected [by the instructional error.]" (GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc., supra, 83 Cal.App.4th at p. 423.)
Construing all reasonable inferences in favor of plaintiff, we conclude that plaintiff presented sufficient evidence in support of these causes of action, and, therefore, plaintiff had an inviolate right to a jury trial on these causes of action. (Cohill v. Nationwide Auto Service (1993) 16 Cal.App.4th 696, 699 ["A civil litigant has `an inviolate right to a jury trial, a right insured by the California Constitution. (Cal. Const., art. I, § 16.) [¶] `The right to trial by jury is a basic and fundamental part of our system of jurisprudence. . . . As such, it should be zealously guarded by the courts . . . . In case of doubt therefore, the issue should be resolved in favor of preserving a litigants right to trial by jury."]) The method employed by the trial court to answer the jurys questions prevented plaintiff from its inviolate right to a jury trial on its causes of action for violation of the covenant of good faith and fair dealing, fraud and quantum meruit.
1. Covenant of Good Faith and Fair Dealing
The jury asked the trial court two questions: "If the jury finds in favor of the defend[a]nt relating to Breach of Contract, can we also find in favor of the plaintiff for the covenant of good faith[?] [¶] Are the (2) charges independent of each other[?]" The trial court instructed the bailiff to answer the first question with a "no" and did not recall being asked the second question.
The trial courts answer was incomplete. The relationship between these two causes of action is sufficiently complex, that, at the least, the trial court erred by not permitting plaintiffs counsel to offer argument as to how to instruct the jury, and clarifying instructions. Moreover, the jurys questions indicated the jury failed to understand the instructions it was originally given concerning the covenant of good faith and fair dealing, an additional reason why plaintiffs counsel should have been given an opportunity to participate in a hearing to address to the jurys questions and seek to offer clarifying instructions.
Summarizing the law, "`[t]he covenant of good faith" "is an implied-in-law term of [every] contract. Therefore, its breach will always result in a breach of the contract, although a breach of a consensual (i.e., an express or implied-in-fact) contract term will not necessarily constitute a breach of the covenant." (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393-1394.) To prove a breach of the implied covenant, it is not necessary that plaintiff show that a specific contractual provision was breached. (Carma Developers (Cal.) Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373.) "Were it otherwise, the covenant would have no practical meaning, for any breach thereof would necessarily involve breach of some other term of the contract." (Ibid.)
Given this understanding of a cause of action for breach of the implied covenant of good faith and fair dealing, the trial courts instruction to the jury was incomplete and required clarifying instructions. From the jurys questions, we do not know if the jury found there was no contract between the parties or whether the jury concluded that defendant had not breached a specific provision of the contract. Had the jury asked whether it could find a breach of the implied covenant when it has determined that the parties did not have a contract, the trial courts "no" answer to the first question would have been correct. This is so because without a contract, there can be no breach of the implied covenant. (Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 49.)
However, it is equally plausible from the jurys questions that the jury found that a contract existed, but that defendant had not breached a specific provision of the contract. Given this significant ambiguity in the jurys questions, and the jurys obvious confusion as to the relationship between these two causes of action, this situation required the trial court to give the parties a chance to offer the trial court guidance and to offer the jury clarifying instructions. "It is clearly improper for the trial judge to instruct the jury through the agency of the bailiff. [Citations.] . . . [T]he error may be prejudicial even though the instruction given is a correct statement of law. Defendants counsel may desire, in the light of the jurys inquiry, to request further clarifying instructions." (People v. Aguilar, supra, 217 Cal.App.2d at pp. 263-264.)
Additionally, pursuant to modified BAJI Jury Instruction No. 10.35, the jury was instructed that "[i]f any party to the agreement violates [the covenant of good faith and fair dealing], that party is in breach of the agreement and is liable for damages." This instruction correctly informed the jury that a breach of the covenant will result in a breach of contract. Thus, to clear up the jurys confusion about the relationship between these two causes of action, the trial court could have reiterated this BAJI instruction to the jury, and additionally instructed the jury that if it found no contract there could be no breach of the covenant as well as instructing the jury that a breach of the covenant can occur in the absence of a breach of a specific contractual provision. These potential instructions would have correctly stated the law, and resolved the jurys confusion about these two causes of action.
In conclusion, the trial courts answer to the jurys questions was, in this context, incomplete and necessitated allowing plaintiffs counsel the opportunity to seek additional clarifying instructions.
Moreover, plaintiff presented substantial evidence in support of its cause of action for breach of the implied covenant. The essential elements of a cause of action for breach of the implied covenant are: (1) an agreement between the parties; (2) plaintiffs performance; (3) defendant engaged in conduct separate and apart from the performance of obligations under the agreement without good faith and for the purpose of depriving plaintiff of rights and benefits under the agreement; and (4) damages, including lost profits. (1 Witkin, Summary of Cal. Law 2003 Supp. (9th ed. 1987) Contracts, § 742-743; and BAJI Jury Instruction No. 10.05.)
Plaintiff presented substantial evidence that the parties entered an agreement to win the bid from Fulton County and that plaintiff fully performed. Substantial evidence indicates that Fulton County awarded defendant the substantial part of a split award services contract based upon plaintiffs participation as the sole software provider. Additionally, plaintiff presented evidence of its ability and intent to reengineer its software into the Oracle format.
There is evidence that defendant engaged in conduct separate and apart from the performance of its obligations under the agreement without good faith and for the purpose of depriving plaintiff of rights and benefits under the agreement. After winning the contract with plaintiff as the only software provider, defendant, in its subsequent statement of work, identified other software providers it would be using for the Fulton County Project. There is no evidence that any Fulton County decision makers, such as Rowan, the County Manager or the Board of Commissioners, with authority to allow defendant to change software providers, ever agreed to such a change. In fact, Fulton Countys Director of IT, Rowan, testified that it was his understanding that defendant was to use plaintiffs software based upon its Response to the RFP and the Countys award of the contract based upon defendants response.
Significantly, on cross-examination, plaintiffs counsel asked defendants salesperson Honig: "Isnt it true that no one at the county ever told you, Hitachi, you may not use BISs software? Yes or no? [¶] . . . [¶] At any time, carving out SCT." Honig responded: "No. No one at the county ever said you could not."
Additionally, pursuant to its contract with Fulton County, defendant was not required to reduce its bid if it successfully lowered its costs. In other words, defendant was entitled to keep any costs reductions, and was not required to pass the savings along to the County. In this regard, there was evidence that, by choosing other software providers, defendant profited significantly. For instance, with respect to the software for the Fulton County District Attorneys office, plaintiffs bid, upon which defendant was awarded the contract, was in the amount of $420,000. The company that defendant chose to replace plaintiff charged only $75,000 for the software. Thus, there was evidence supporting the reasonable inference that defendant chose other software providers not at the behest of Fulton County, but rather to save money. In other words, plaintiff presented evidence that defendant excluded plaintiff from the Fulton County project without good faith and for the purpose of depriving plaintiff of rights and benefits under the agreement.
Likewise, with respect to the public defender software, plaintiff intended to charge defendant $ 209,000. Defendant ultimately gave the work to a company that charged $163,000.
Finally, plaintiff presented evidence that it suffered damages, including $3.9 million in lost profits. Defendant argues that plaintiffs lost profit damages were speculative as a matter of law because plaintiffs software was not in Oracle, and that this would have been a new product for plaintiff, for which lost profits would have been speculative. We reject this argument and conclude that plaintiff presented sufficient evidence supporting its lost profits allegations for the issue of whether plaintiffs damages were speculative to be decided by a jury.
For example in this case, the jury was instructed pursuant to BAJI Jury Instruction No. 14.60 as follows: "You are not permitted to include speculative damages, which means compensation for future loss or harm which, although possible, is conjectural or not reasonably certain. [¶] However, if you determine that a party is entitled to recover, you should compensate a party for loss or harm caused by the injury in question, which is reasonably certain to be suffered in the future."
In Resort Video, Ltd. v. Laser Video, Inc. (1995) 35 Cal.App.4th 1679, this court set forth general principles for analyzing whether lost profit damages are speculative: "`Lost profits to an established business may be recovered if their extent and occurrence can be ascertained with reasonable certainty; once their existence has been so established, recovery will not be denied because the amount cannot be shown with mathematical precision. [Citations.] . . . However, `[i]t has been frequently stated that if a business is new, it is improper to award damages for loss of profits because absence of income and expense experience renders anticipated profits too speculative to meet the legal standard of reasonable certainty necessary to support an award of such damage. [Citations.] However, the rule is not a hard and fast one and loss of prospective profits may nevertheless be recovered if the evidence shows with reasonable certainty both their occurrence and the extent thereof. [Citations.] . . . Unestablished businesses have been permitted to claim lost profit damages in situations where owners have experience in the business they are seeking to establish, and where the business is in an established market." (Id. at pp. 1697-1698, italics omitted; see also Kids Universe v. In2Labs (2002) 95 Cal.App.4th 870, 883-884 ["`The award of damages for loss of profits depends upon whether there is a satisfactory basis for estimating what the probable earnings would have been had there been no tort. If no such basis exists, as in cases where the establishment of a business is prevented, it may be necessary to deny such recovery. [Citations.] If, however, there has been operating experience sufficient to permit a reasonable estimate of probable income and expense, damages for loss of prospective profits are awarded. [Citations.] . . . `Lost anticipated profits cannot be recovered if it is uncertain whether any profit would have been derived at all from the proposed undertaking. But lost prospective net profits may be recovered if the evidence shows, with reasonable certainty, both their occurrence and extent. [Citation.] It is enough to demonstrate a reasonable probability that profits would have been earned except for the defendants conduct. [Citations.] Moreover, the court held, a plaintiff is `not required to establish the amount of its damages with absolute precision, and [is] only obliged to demonstrate its loss with reasonable certainty."])
This case presents a hybrid scenario, an established business with an existing product that was to be reengineered into a new format. Plaintiffs operation, founded in 1971, was an established business in an established software market. Plaintiff started developing its public safety software in the 1980s and completed integration of those products pieces by the early 1990s. In fact, the evidence indicates that defendant solicited plaintiff because of its good reputation in the relevant marketplace and because plaintiff had products to fit all of Fulton Countys needs identified in the RFP.
As noted in the Factual and Procedural Background, in its Response to Fulton Countys RFP, defendant wrote: "BIS provides the most integrated Criminal Justice Information System (CJIS) in the market place." (Emphasis in original.)
Defendant claims, however, that plaintiffs software products would have been a new product, analogous to an unestablished business. We disagree with defendants assertion, and conclude that plaintiff presented sufficient evidence of lost profits, which showed, "with reasonable certainty, both their occurrence and extent." (Kids Universe v. In2Labs, supra, 95 Cal.App.4th at p. 884.)
Drawing all reasonable inferences for plaintiff, as we must, the evidence supports the proposition that plaintiffs software applications to be reengineered into the Oracle format, were not new products, but were existing products for which there was a sufficient track record to calculate the occurrence and extent of plaintiffs lost profits. Plaintiffs president, Macho, testified that over its 30-year history, plaintiff was "constantly" upgrading and updating its products. Macho also testified that for these types of projects, plaintiff prepares a budget which uses a "standard pricing formula."
Plaintiffs final bid for the CJIS project as set forth in a spreadsheet sent to defendant was $7.2 million, minus a 20 percent price reduction for a final revenue projection of approximately $5.4 million. Macho calculated this number based upon projected revenue for the software licenses of $3,025,000 and services revenue of $5,122,000. Plaintiff then deducted two-thirds of the training costs from the services revenue and further reduced both projections by 20 percent as requested by defendant during the bid process. This left license revenue of $2,420,000 and services revenue of $3,671,000. Plaintiff further testified that 40 percent of the services revenue is historically its profit margin. Thus, according to Macho, adding the licenses revenues with 40 percent of the services revenues amounts to $3,887,000 in lost profits.
Defendant counters that plaintiffs software license fees are speculative because plaintiff and defendant never entered into a software licensing agreement and that there was no way to know which entity would have owned the intellectual property rights. In fact, defendant asserts that the dispute over intellectual property rights was one of the reasons why defendant did not execute an engagement services agreement with plaintiff. Thus, defendant asserts that there was no way that plaintiff could have calculated its lost profits on the license revenues. On cross-examination, however, Macho refuted this point testifying that he had received a call from defendants vice president, Robinson, who told Macho not to be concerned about the alleged intellectual property dispute. Resolving all conflicts in favor of plaintiff, as we must for purpose of this appeal, plaintiff presented substantial evidence that there was no dispute over ownership of the intellectual property rights and that plaintiff would receive a 100 percent profit margin on those rights.
The evidence indicates that some of the software to be provided by plaintiff was ultimately provided by SCT, another software company. Supporting plaintiffs contentions about ownership of the intellectual property rights, defendants salesperson in charge of the Fulton County project, Honig, testified that SCT did not give up any of their intellectual property rights in their software to defendant.
Defendant also argues that the profit margin on the services portion of the lost profit calculation is speculative because plaintiff did not know how much it would have cost to reengineer its software. We reject this argument. Plaintiff had been in the process of revising its software since the company was founded. This gave it a lengthy time period to calculate the costs of updating its products. Additionally, while Macho did not know the precise final costs of reengineering its products, plaintiff had reengineered 10 percent of its products into the Oracle format. This could provide a reasonable basis to determine costs for the reengineering of the other software applications. Paraphrasing the analysis set forth in Kids Universe v. In2Labs, supra, 95 Cal.App.4th at page 883, a plaintiff is not required to establish the amount of its damages with absolute precision, but only with reasonable certainty.
Plaintiff presented evidence of "operating experience sufficient to permit a reasonable estimate of probable income and expense." (Kids Universe v. In2Labs, supra, 95 Cal.App.4th at p. 883.) We cannot therefore on this record conclude that plaintiffs lost profit damages were speculative as a matter of law. Based upon the foregoing, we conclude that plaintiff presented sufficient evidence for its claim for violation of the covenant of good faith and fair dealing to be heard and determined by a jury.
2. Fraud
Plaintiff presented substantial evidence in support of its fraud cause of action. The essential elements of a cause of action for fraud are: (1) a promise or representation by defendant; (2) that was false; (3) made with knowledge of its falsity, and (4) with an intent to deceive, coupled with (5) actual detrimental reliance and (6) resulting damages. (Lim v. The.TV Corp. Internat. (2002) 99 Cal.App.4th 684, 694.)
Defendant represented and promised to plaintiff that if plaintiff teamed with defendant and they won the Fulton County contract, plaintiff would install the software with the exception of the portion of the contract awarded to IBM. Based upon plaintiffs evidence at trial, including the testimony of Fulton Countys IT Director, Rowan, the jury could have concluded that this promise was false as shown by defendants statement of work, drafted after defendant won the contract. Additionally, defendants Honig testified that no one from Fulton County ever instructed defendant not to use plaintiffs software.
Knowledge of falsity and intent to deceive may be proven by circumstantial evidence. (Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 411-412.) In this case, there is sufficient circumstantial evidence for the fraud count to be decided by the jury.
Defendant won the major portion of the Fulton County project with plaintiff identified as its only software provider. Soon after winning the contract, defendant replaced plaintiff as the software provider. There is evidence that after using plaintiff to win the contract, defendant replaced plaintiff with less expensive software providers. Pursuant to its contract with Fulton County, defendant was entitled to keep these savings and the County was not entitled to a refund or price reduction.
Additionally, defendant defended this case asserting that Fulton County told it not to use plaintiffs software and that it did not use plaintiffs software because of a dispute over intellectual property rights. This theory directly conflicts with the understanding of Rowan, Fulton Countys key decision maker on the contract and the person authorized to conduct the bidding process. It also conflicts with the testimony of defendants lead salesperson, Honig, who testified that no one from the County ever told defendant that defendant could not use plaintiffs software. Moreover, the testimony of Macho and the fact that SCT kept its intellectual property rights undercuts defendants assertion that the alleged intellectual property dispute was the reason that defendant did not use plaintiff as the software provider. Finally, Macho testified that no one at defendant told him that plaintiff had been excluded from the Fulton County project by the County until after the litigation had commenced, inferring that defendant had created the Fulton County defense after the fact.
Plaintiff also presented evidence that it relied upon defendants promises to its actual detriment. Macho testified that on average plaintiff bids on one or two contracts a month and that plaintiff is successful on about three per year. Plaintiff had never been involved in a situation in which the team won the bid and it was then excluded. This indicates that plaintiff reasonably relied upon defendants representations that it was part of the CJIS team.
Finally, with respect to plaintiffs damages, we concluded in part B(1) of the Discussion, above, that plaintiff presented sufficient evidence of lost profits for the issue to be determined by a jury. Based upon the foregoing, we conclude plaintiff presented sufficient evidence for its fraud claim to be heard by the jury.
3. Quantum Meruit
Plaintiff presented substantial evidence in support of its quantum meruit cause of action. "[I]n order to recover under a quantum meruit theory, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant." (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248, italics omitted.) Additionally, BAJI Jury Instruction No. 10.71, which was given in this case, also required plaintiff to show that "both parties had the expectation that during the time the services were performed that compensation should be made."
Plaintiff presented substantial evidence in support of its quantum meruit cause of action. The evidence indicates that plaintiff was acting pursuant to defendants express request for services in assisting defendant with obtaining the winning bid from Fulton County. In fact, at defendants prodding, plaintiff gave up the opportunity to develop a relationship with IBM for purposes of the Fulton County project.
Likewise, there is evidence that plaintiffs services were intended to and did benefit defendant. Significantly, with plaintiff identified as its only software provider, defendant won the major portion of the Fulton County contract.
Defendant argues, however, that plaintiffs quantum meruit cause of action fails as a matter of law, because plaintiff cannot show that at the time that plaintiff performed it had an expectation that compensation would be made. We disagree with this argument because plaintiff presented evidence that it did expect to be compensated.
Plaintiffs president Macho testified that generally in this type of situation had defendant not been awarded the Fulton County contract, then plaintiff, as a CJIS team member and future subcontractor, did not have an expectation of recouping its bid preparation costs; e.g., the approximate $ 168,000 plaintiff expended during the bid process.
However, Macho also testified that when the bid is successful, and the contract awarded, that plaintiff expected to recoup its bid costs as part of the profit factored into the overall bid prices. Thus, if defendant won the contract, plaintiff expected to recoup its bid costs.
Based upon the foregoing, we conclude plaintiff presented sufficient evidence for its quantum meruit claim to be heard by the jury.
C. Conclusion
Plaintiff presented substantial evidence in support of its causes of action for breach of the covenant of good faith and fair dealing, fraud or quantum meruit. It was within the province of the jury to determine whether to accept or reject plaintiffs evidence. Because of the manner in which the jury was instructed by the bailiff, the jury never weighed, and plaintiff was denied the right to have the jury weigh, this evidence. This constituted actual prejudice to plaintiff and resulted in a miscarriage of justice. In other words, the record contains sufficient evidence indicating there was a "`reasonable probability" that the jury would have reached a different result on these causes with "proper instruction." (GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc., supra, 83 Cal.App.4th at p. 423.)
Our conclusion that plaintiff presented substantial evidence in support of its claims for violation of the covenant of good faith and fair dealing, fraud, and quantum meruit resolves against defendant the issues raised by defendants cross-appeal from the trial courts order denying defendants motion for a directed verdict.
Based upon the foregoing, we reverse the judgment. We also reverse the order denying plaintiffs motion for a new trial and direct the trial court on remand to enter a new and different order granting plaintiffs motion for new trial on the basis of "[i]rregularity in the proceedings." (Code Civ. Proc., § 657, subd. (1).)
D. Evidentiary Issues on Remand
Plaintiff claims the trial court abused is discretion with respect to two evidentiary rulings. Pursuant to section 43 of the Code of Civil Procedure, plaintiff asserts that on remand we should instruct the trial court to enter new and different orders reversing these two evidentiary rulings. Finding no abuse of discretion, we decline plaintiffs invitation to reverse the trial court with regard to these evidentiary ruling.
Code of Civil Procedure section 43 provides in pertinent part: "In giving its decision, if a new trial be granted, the court shall pass upon and determine all the questions of law involved in the case, presented upon such appeal, and necessary to the final determination of the case."
1. Standard of Review
Evidentiary rulings by the trial court are reviewed for abuse of discretion. "`Broadly speaking, an appellate court reviews any ruling by a trial court as to the admissibility of evidence for abuse of discretion. [Citation.] This standard of review applies to a trial courts determination of the relevance of evidence, as well as to whether the evidences probative value is substantially outweighed by its prejudicial effect. [Citations.] The trial courts `discretion is only abused where there is a clear showing [it] exceeded the bounds of reason, all of the circumstances being considered. [Citation.]" (People ex rel. Lockyer v. Sun Pacific Farming Co. (2000) 77 Cal.App.4th 619, 639-640.)
2. Additional Background Information and Analysis
a. The Mitchell Letter
Prior to filing this litigation, plaintiffs counsel wrote a demand letter to defendant. Steven D. Mitchell, defendants general counsel, responded on September 19, 2000, stating: "As far as the legal argument regarding a purported joint venture, I cannot find any factual or legal merit in your demands. You have suggested that you intend to file a claim against [defendant], based on this matter, if we cannot reach a resolution. Please understand that if you should file it, you and [plaintiff] should expect a counterclaim from [defendant] for pervasive fraud and a demand for sanctions for specious and vexatious litigation."
In Mitchells letter, written approximately one and a half years after defendant submitted its Statement of Work (excluding plaintiff from the Fulton County project), he did not inform plaintiff that defendant had allegedly excluded plaintiff based upon the wishes of Fulton County, which was one of defendants primary defenses at trial. Plaintiff asserts that Mitchells failure to inform plaintiff that it was excluded at the behest of Fulton County constitutes evidence in support of plaintiffs fraud cause of action. Plaintiff asserts the letter shows that defendants defense based upon the wishes of Fulton County was concocted after the fact. Defendant argues that defendant did not inform plaintiff of the alleged decision of Fulton County to exclude plaintiff from the project defense until after the litigation was filed.
Additionally, plaintiff asserts that the threats in the letter are relevant to its punitive damages claim because the threats demonstrated malice and oppression, as well as ratification by an officer of defendant of the conduct of its employees.
Pursuant to defendants motion in limine, the trial court excluded the letter, explaining that it was too great a leap to conclude that Mitchells response to plaintiffs demand letter constituted evidence that defendant had concocted its Fulton County defense after the fact. The trial court impliedly concluded that the probative value of the letter was substantially outweighed by its prejudicial effect. (Evid. Code, § 352.) We cannot say that this was an abuse of discretion. The letter, a response to a pre-litigation demand, is, at best for plaintiff, only weak circumstantial evidence of an after the fact concocted defense and weak circumstantial evidence supporting punitive damages.
Moreover, Macho testified that no one from defendant told him the reason for excluding plaintiff from the Fulton County project until after the litigation was filed. In this regard, the letter would have been duplicative and cumulative of Machos testimony. We cannot conclude that the trial court abused its discretion or exceeded the bounds of reason given the circumstances.
b. Testimony of Three Fulton County Employees
Plaintiff also claims the trial court erred by admitting the deposition testimony of three Fulton County workers: DAndre Berry, Manager of the Fulton County Public Defenders Office; Rebecca Keel, a deputy district attorney representing the Fulton County District Attorneys Office; and Michael Rary, Court Administrator of the State Courts of Fulton County. Defendant offered the deposition testimony of these three individuals in support of its claim that after Fulton County awarded the contract to defendant, Fulton County agencies wanted software other than plaintiffs software.
More specifically, plaintiff claims the trial court erred by admitting this testimony because: (1) the CJIS contract was between defendant and Fulton County, not individual agencies; (2) there was no evidence that any of these individuals had authority to bind the County or choose the software to be provided; and (3) the CJIS contract superseded the desires of the individual agencies.
After the RFP was issued and the vendors submitted their responses, Fulton County formed three evaluation committees: the policy, technical, and functional evaluation committees. Each of the above-identified Fulton County workers was on the functional committee, representing their respective offices as end-users of the software to be installed. After reviewing the proposals from the vendors and attending demonstrations, these committees gave their recommendations to Fulton County IT director, Rowan.
DAndre Berry from the public defenders office recommended Key Point as the software provider. As part of a separate procurement process conducted because of a Y2K problem, Michael Rary, Court Administrator of the State Courts, recommended SCT as the software provider. As part of the CJIS selection process, Rary testified that the State Courts also choose SCT as the software provider.
Deputy District Attorney Keel testified that the district attorney, Paul Howard, independently of the CJIS committee decided to purchase Prosecutors Dialogue as the software application. Keel testified she attended a CJIS meeting with Howard, where Howard made it clear to the CJIS committee before the award to defendant that his office would be using Prosecutor Dialogue. Additionally, Keel testified that no one in the IT department told her that her office would have to use plaintiffs software. In fact, Keel testified that it was her understanding that the IT department allowed the Prosecutors office to choose its own software.
Specifically, Keel testified: "I have said this before. Anyone in that process had to be deaf, dumb, and blind not to know at the time that we were going with Pro Dialog, and I still believe that."
Ultimately, the functional committee recommended IBM. The final decision makers, however, were Rowan and the Board of Commissioners. Rowan overrode the functional committee recommendation with regard to all but certain courts, which received the SCT software in the dual award. Rowan recommended defendant and plaintiff for the major share of the project. The dual award was approved by the County Manager and the Board of Commissioners. Moreover, Rowan testified that no one except the representative from the superior courts ever told him not to use plaintiffs software. Finally, the undisputed point of the CJIS project was to provide Fulton Countys criminal justice community with an integrated software system.
Defendant asserted at trial that no agency wanted plaintiffs software. However, according to plaintiff, based upon Rowans testimony, the CJIS contract was intended to override the desires of the individual agencies. On this basis, plaintiff asserts that the probative value, if any, of the deposition testimony of Berry, Keel and Rary was far outweighed by its prejudicial effect. Plaintiff claims that because Berry, Keel and Rary could only make recommendations and were not decision makers, their testimony was irrelevant. Additionally, plaintiff asserts that this testimony confused and misled the jury, which, given its finding on the breach of contract cause of action, must have concluded that defendant was obligated by Fulton County to exclude plaintiff from the CJIS project.
Defendant responds that this testimony was relevant to Fulton Countys decision making process. Defendant also asserts that Fulton Countys IT Director, Rowan, had credibility issues and the testimony of these employees was necessary to rebut Rowans testimony. It is undisputed that sometime after defendant won the Fulton County project, defendant hired and employed Rowan. That employment relationship ceased before trial. Defendant asserts that, on this basis, Rowan was a disgruntled former employee.
From this record, it is difficult to determine the substantive impact of these employees opinions upon the decision making process, when their input was offered, why plaintiffs software was not selected for their particular departments, and whether their testimony was relevant to rebut Rowans testimony. Therefore, we leave this issue to trial courts discretion upon retrial.
DISPOSITION
The judgment is reversed. The order denying plaintiffs motion for a new trial is reversed. The trial court is directed to enter a new and different order granting plaintiffs motion for a new trial. The trial courts order denying defendants motion for a directed verdict is affirmed.
Plaintiff is to recover costs on appeal.
We concur: CROSKEY, Acting P.J. and ALDRICH, J.