Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 06CC01934, Dennis S. Choate, Judge.
Gutierrez, Preciado & House and Calvin House for Plaintiff and Appellant.
Neufeld Law Group and Paul S. Marks for Defendant and Respondent.
OPINION
O'LEARY, ACTING P. J.
Epicor Software Corporation (Epicor) sued The Imagery Group, Inc. (Imagery), for breach of contract after Imagery backed out on the purchase of manufacturing software from Epicor. Epicor appeals from the judgment after a jury verdict in Imagery’s favor contending it is not supported by substantial evidence. We affirm the judgment.
FACTS
After Imagery backed out of an agreement to purchase software from Epicor, Epicor sued Imagery for breach of contract. Imagery filed a cross-complaint against Epicor for fraud, misrepresentation, and rescission.
Imagery manufactures promotional products. At trial, Imagery’s owner, Greg Johnson, testified that in 2004, the company needed new manufacturing software. In late 2004, Imagery bought a software program called DBA, which it started to implement in early 2005, but the software was largely a disaster. In particular, Johnson had tremendous problems with the software “configurator,” which was an extremely important function to Johnson. The configurator sets the rules for the software to follow in processing an order and interfacing with the particular manufacturer’s products and equipment. When Johnson learned the configurator would no longer be supported by the DBA software vendor, he started looking for another program.
By the fall of 2005, Johnson had identified a program by Intuitive as a strong possibility. Then in late November someone suggested he look at Epicor’s Vista program. After some preliminary Internet investigation by Johnson, he determined Vista appeared to “be a good fit” for Imagery, and he called Epicor on November 28, 2005.
On November 29, Johnson’s call was returned by David Orstad. Orstad identified himself to Johnson as an Epicor “Territory Manager,” but his title at the time was in fact “Inside Sales Representative,” a distinction Johnson believed was significant because as a manager Orstad would presumably have more clout. Orstad agreed that referring to himself as a Territory Manager (a position to which he was later promoted) “look[ed] better.”
In his first conversation with Orstad, Johnson was emphatic he “had a go-live date” (i.e., fully implemented and functioning) of January 1, 2006, which was right before the company’s busiest sales season. Orstad told Johnson that date was “aggressive but do-able, [Epicor] had other clients that had implemented within 30 days.” Because he was so concerned about whether the program really could be implemented in time, Johnson asked Orstad if he could speak to the implementation staff. Orstad told him that would not be possible, but not to worry because Epicor had “17,000 employees, [and] plenty of resources to implement the time frame, and [Johnson] believed him.” Epicor in fact had about 2,000 employees.
Orstad did not tell Johnson that Epicor had only two Vista configuration specialists. Johnson testified that information would have been extremely important to him because it indicated Epicor had more limited resources and would have made him doubt the software could be implemented in his time frame. Nonetheless, Johnson understood there could be no absolute promises by Orstad that the software would be fully implemented by January 1, 2006, because implementation of a new manufacturing software program would be a “team effort” between Epicor and Imagery staff, and Epicor would have no control over whether Imagery was able to do its part.
Orstad arranged for Johnson to participate in an Internet demonstration of the Vista program on the next morning, November 30. Johnson looked at the particular software modules Imagery would need including the software configurator module. Orstad explained there would be two agreements involved in the sales transaction—the first would be the purchase and licensing of the actual software, the second would be a consulting agreement with Epicor for implementation of the Vista software.
That same day, Orstad prepared a formal proposal for Johnson. The Vista software retail price was approximately $67,000, but Orstad offered Johnson a substantial discount if he signed the deal that day. Orstad testified he was a commissioned salesperson, he had not yet met his annual sales quota, and he obtained a discount for Imagery to get Johnson to sign the deal quickly. The proposed price for the software was approximately $37,500, which Johnson testified was significantly less than the competing Intuitive software he was looking at. Johnson testified he went ahead with the Vista software because of the discount and because of Orstad’s representation the software could be implemented by January 1.
Johnson signed the purchase order form and sent a check for the purchase to Epicor via overnight mail on November 30. The order form stated the order and use of the software “is subject to the terms and conditions of the shrink-wrap License Agreement and exhibits thereto that accompany the [software]. Nothing contained in any Licensee document, including printed terms on a Licensee purchase order shall become part of this Order.” The order form said nothing about Epicor’s return policy.
The Vista software was shipped to Imagery on December 1, 2005. The shrink-wrapped Licensing Agreement that accompanied the software began with the following language, “ By loading and installing this software on your computer, you indicate your acceptance of the following [Licensing Agreement] . . . . If you do not agree to the terms of this [Licensing Agreement], for a full refund, promptly (within no later than 30 days of receipt) return this product to the place you obtained it.” One of the Licensing Agreement’s general terms was, “You expressly agree and acknowledge that in determining to enter into this Agreement that you did not rely on any representation or warranty by anyone other than those expressly set forth in this Agreement.”
On December 1, Johnson learned from an employee that when told Imagery had gone with Epicor’s Vista program, the Intuitive sales representative said there were problems with the software’s “functionality.” The comments concerned Johnson and he asked Orstad to give him some “references” for the Vista software.
On Thursday, December 1, Orstad e-mailed Johnson confirming the software had shipped, and referring him to the implementation team, Wendy Sanders and Patrick Deal. Johnson immediately called Sanders, but she did not call back until the next morning, Friday, December 2. Johnson told Sanders Imagery had a go-live target date of January 1, 2006, and he was particularly and primarily concerned about the timing of the configurator installation and training. Sanders told Johnson she had no configurator training time available until the first week of January. Johnson testified he was shocked to hear Sanders’ proposed schedule because he knew Orstad had advised Sanders of how time sensitive the installation was. When Johnson told Sanders the date was not acceptable to him, Sanders said she would see what she could do.
Later that morning, Sanders e-mailed Johnson that she had located someone who could do a “remote session” for configurator training on December 22. Although Johnson understood configurator training would normally not take place until “down the line” in the implementation process, because of the aggressive implementation schedule, they needed to accomplish many things simultaneously and he in particular wanted “to get the configurator much earlier in the process.” In Johnson’s experience with having implemented several manufacturing software programs over the years, if configurator training was not going to occur until December 22, it was “completely outside of any reasonableness of getting that software package installed by [January 1].” Sander’s proposed training date abutted the holidays, and given the nature and complexity of the tasks in the business, Johnson testified Imagery’s staff simply could not have been trained in that short a time frame.
On the afternoon of December 2, Johnson e-mailed Orstad telling him he was canceling the order, returning the software unopened, and had placed a stop payment on the check. Johnson explained to Orstad, “I was very clear in our discussions that we wished to be up and operating by January 1, 2006. I was informed that this was aggressive but possible. The earliest anyone can help us with the configurator, a core function of the system, per [Sanders] is December 22. This is a one day teleconference, not [an] on-site session. This makes implementation [seven] days latter imposable [sic].” In a telephone conversation later that day, Orstad told Johnson Epicor company had a “no returns policy.” Johnson asked Orstad where to return the unopened software, Orstad told him to return it to the address it had shipped from in California. The software was returned to Epicor unopened.
On Monday, December 5, Orstad e-mailed Johnson imploring him to work with Epicor on an implementation plan. Johnson replied that his decision was firm, he did not feel Epicor had sufficient resources “to provide the implementation we require.” Over the next several days, Orstad and his manager made several attempts to contact Johnson to no avail. In mid-December, Orstad wrote to Johnson, asking Johnson to please contact him or his manager, and advising Johnson there was “a strict no-return policy for any purchase of our software, but for some reason you have stopped payment on your check and [returned the software] . . . .” Johnson did not contact Epicor again.
Sanders testified about the Vista implementation process. She had done over 200 installations of the software (many over the Internet), and was the most experienced person in Vista software implementation. Sanders testified it was “aggressive,” but possible to have the software implemented within Imagery’s timeline. She explained configurator installation and training typically does not occur until the implementation process is about 80 percent complete, and the process is frequently done on a remote basis. The December 22 configurator training date she offered Johnson did not make implementation by January 1 impossible. Furthermore, had Johnson told her he wanted something sooner, she would have found someone.
Orstad testified he understood Imagery wanted the Vista software fully implemented by January 1. The usual implementation time is 30 to 90 days, but Orstad believed Johnson’s time frame was possible because other customers had done it in less than 30 days. Orstad denied telling Johnson he could not talk to the implementation team (Johnson never asked), and denied saying Epicor had 17,000 employees. After Johnson backed out of the deal, Johnson indicated to Orstad he had been scared off by comments made by an Intuitive sales representative bad mouthing the Vista software (telling him the configurator function had problems) and telling him Epicor could not implement the software by January 1. Orstad told Johnson there was “a strict no-return policy.” The only ground for return and refund is if a customer disagrees with a term of the Licensing Agreement before the software is installed, but Orstad did not tell Johnson this. To Orstad’s knowledge, no customer had ever returned Vista software due to disagreement with the Licensing Agreement terms.
At trial, the jury was given a special instruction on returns under the License Agreement: “The Vista License Agreement allows a customer to return the software for a full refund [only] if a customer does not agree with the license terms and promptly, (within no later than 30 days of receipt) returns the product to the place the customer obtained it.” Below was written “strike word only both can argue.”
The jury was also given an instruction that combined Imagery’s fraud defense to contract formation and Imagery’s cross-complaint. As to the complaint, the instruction told the jury that Imagery “claims that no contract was created because its signature was obtained by fraud namely that Epicor falsely stated it would have the program up and running by [January] 1st.” If the jury found all the elements of misrepresentation to be present, then no contract was created. The instruction went on to advise that as to Imagery’s cross-complaint, if it found misrepresentation, Imagery would also have to prove it was harmed in order to prevail.
The jury returned a general verdict in Imagery’s favor on the complaint and in Epicor’s favor on the cross-complaint. Epicor filed a motion for judgment notwithstanding the verdict, which was denied.
DISCUSSION
Epicor contends there is insufficient evidence to support the jury verdict in Imagery’s favor on the complaint. Epicor argues it established Imagery’s breach of the contract as a matter of law and was entitled to judgment in its favor. We conclude substantial evidence supports the verdict.
A plaintiff seeking contract recovery must prove contract formation and breach. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839; Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 654-655.) Here, Imagery contended there was no contract formation because Johnson’s assent was obtained through misrepresentations by Orstad.
“[A] contract induced by fraud renders the entire agreement voidable, permitting the aggrieved party to defend a suit on the contract by objecting to its enforcement because procured or induced by fraud. [Citations.]” (Filet Menu, Inc. v. C.C.L. & G., Inc. (2000) 79 Cal.App.4th 852, 861-862.) The jury was instructed on Imagery’s fraud defense and returned a general verdict for Imagery. If substantial evidence supports a finding in Imagery’s favor on its defense, we must affirm. (Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 673 [“general verdict implies a finding in favor of the prevailing party of every fact essential to the support of his action or defense”].)
Epicor argues none of the following three allegedly false statements made by Orstad to Johnson could support a finding of fraud in the inducement: (1) that Epicor had a strict no return policy when in fact the shrink-wrap Licensing Agreement permitted returns if the purchaser disagreed with any term of the Licensing Agreement (because that statement was made after the purchase order was signed); (2) that Epicor had 17,000 employees when it in fact had only 2,000; and (3) the January 1, 2006, implementation date was “do-able.” Epicor argues that either the statements were not material to Johnson’s decision to make the purchase, were not reasonably relied upon by Johnson, or were not untrue.
Preliminarily, we note Epicor’s argument concerning the fraud in the inducement defense is unsupported by any reasoned legal analysis and amounts to nothing more than a reiteration of the arguments made to the jury. For that reason we may deem them waived. (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 978-979.)
Furthermore, there is substantial evidence to support a finding of fraud in the inducement. The elements of fraud are: (1) a false representation or concealment of a material fact; (2) made with knowledge of falsity; (3) with the intent to induce action by another party; (4) where that other party does act in justifiable reliance; and (5) resulting in damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
While not overwhelming, there is evidence from which a jury could reasonably conclude Orstad misrepresented that Epicor had the resources to implement the Vista software in the short time Johnson desired so as to induce him to quickly place the order with Epicor. Orstad, a commissioned salesperson, had not met his annual sales quota and offered a huge discount to get Johnson to agree to the purchase before the end of November. When Johnson questioned if Epicor really could implement the software in his short time frame, Orstad told him it was “aggressive but do-able.” Orstad knew the configurator was a key concern for Johnson. When Johnson asked to talk to the implementation people first, Orstad said it was not possible, but he should not worry because with 17,000 employees, Epicor had more than sufficient resources to implement the software in the short time frame. Johnson trusted Orstad in part because Orstad called himself a Territory Manager, making it look like he had more influence. Orstad was not a manager, but was an inside salesperson. As it turned out, Epicor had only two configurator specialists and far fewer employees. When Johnson talked to Sanders, she said she could not schedule configuration installation and training until the first week of January, after Johnson’s implementation date. When Johnson balked, she offered him a remote training session on December 22.
That Epicor offered evidence that even with the late date for configurator installation and training it was feasible the software could have been fully implemented does not change the result. Johnson testified he agreed to the purchase because Orstad led him to believe the software could be fully implemented by January 1 and assured him Epicor had sufficient resources to meet that deadline. In his experience, having gone through several manufacturing software implementations, Johnson knew that for his business a December 22 configurator training date made that impossible. The testimony of a single witness is sufficient to support the judgment. (Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1075.)
In summary, we conclude there is sufficient evidence to support a finding in Imagery’s favor on its fraud in the inducement defense to contract formation. Accordingly, we need not consider Epicor’s contentions concerning the sufficiency of the evidence supporting the other theories presented to the jury—that the License Agreement permitted Imagery to return the software within 30 days for a full refund, and that Imagery justifiably anticipated a breach of the purchase contract by Epicor.
DISPOSITION
The judgment is affirmed. The Respondent is awarded its costs on appeal.
WE CONCUR: MOORE, J., IKOLA, J.