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Salvin v. Ionex Telecommunications, Inc.

Court of Appeals of California, Second District, Division Six.
Nov 3, 2003
2d Civil No. B160662 (Cal. Ct. App. Nov. 3, 2003)

Opinion

2d Civil No. B160662.

11-3-2003

LINDA SALVIN, Plaintiff and Respondent, v. IONEX TELECOMMUNICATIONS, INC., Defendant and Appellant.

Kirkpatrick & Lockhart, Robert E. Feyder, Michael J. Quinn and Christopher J. Kondon for Defendant and Appellant. The Marks Law Firm and Scott A. Marks for Plaintiff and Respondent.


Ionex Telecommunications, Inc. appeals from a judgment awarding Linda Salvin $98,132 in damages for breach of a contract to provide voicemail service. Appellant contends the evidence was insufficient to support the award of damages, the trial court erred in admitting expert testimony on the issue of Salvins lost income, and that tariffs on file with the Public Utilities Commission (PUC) and the Federal Communications Commission (FCC) bar Salvins claim for damages. We affirm.

Factual and Procedural Background

Salvin promotes herself as a psychic whose radio programs are broadcast live through cable television. By late 1997, her show was heard nationwide two or three nights a week and she wanted to market her psychic services and products through a toll free number.

In December 1997, she received an unsolicited e-mail from appellants representative offering free gasoline if she purchased a virtual office system which included a nationwide toll free number and voicemail system. She was assured that people nationwide could call her number, she could receive multiple calls simultaneously without the caller getting a busy signal, and that callers could leave messages she could later retrieve. She entered into a contractual relationship with appellant in February of 1998 for this system and paid a monthly fee for the service.

Salvin actually entered into the contract with Telecom Resources International, a company purchased by appellant. The parties stipulated that appellant was obligated to pay any judgment entered by the trial court.

During her program, Salvin instructed her listeners to call the toll free number to obtain her services and, starting in 1999, her unique candles. She received voicemail messages from the continental United States, Alaska, Hawaii, and other countries. Salvin checked her messages after each show, noting the name and telephone number of the caller in a message book. She testified that 85 to 90 percent of her income was derived from returning these calls.

During the contractual period, there were times when Salvin was unable to access her voicemail. On those occasions, she was told by appellants staff that the problem was due to computer difficulties and that after repairs were made she could retrieve all of her voicemail messages. In August or September of 1999, she became frustrated over the amount of times her voicemail system was inoperative. She complained to appellants staff and was assured they were fixing the computer software problems.

In November of 1999, Salvin checked her voicemail and was unable to access 33 messages left for her. She again complained to appellants staff and they offered to send her a record of every call made to her. Salvin ultimately obtained a computer list of all calls made to her number between February of 1998 and March of 2000. After comparing the computer records to her message pads, she discovered that appellant had failed to accurately store all of her messages and realized the magnitude of her loss. She ended her relationship with appellant on March 15, 2000, and began using voicemail services offered by other companies. She then filed this action against appellant, seeking damages for breach of contract and negligence.

At the bench trial, Salvin claimed her income substantially increased after she terminated appellants services. Her certified public accountant (CPA), Mr. Levin, produced a graph depicting the large rise in her income after March of 2000. This graph, her tax returns, and her profit and loss statements for the years 1999 through 2001 were admitted into evidence and showed that her income nearly doubled after March of 2000. Based on his familiarity with Salvins business, Levin concluded there was nothing to account for the sharp increase in income other than ending her relationship with appellant.

Levin calculated the amount of income Salvin lost as a result of the defective voicemail system by comparing the telephone numbers listed in Salvins message pads to those listed in appellants computerized records (exhibits 7, 8, 108-109.) If a telephone number appeared on the computerized list but did not appear in Salvins message book the same day, Levin concluded the message was "lost" by appellants computer system. A monthly tally from June of 1998 to March of 2000 was calculated regarding the number of calls made to Salvin versus how many messages were retrieved by her (exhibit 12). Levin calculated that out of a total of 4,203 messages left for Salvin during the period, she was only able to retrieve 1,952 of those messages (about 46 percent).

Levin identified on a monthly basis Salvins business income and applied the percentage of calls lost monthly to that revenue. He determined what her income would have been had she received 100 percent of her messages each month. He opined that Salvin lost a total of $152,479 in sales from May of 1998 to March of 2000 due to lost messages.

Levin assumed that not every call retrieved by Salvin resulted in a sale. He assumed the same proportion of sales would result if Salvin had received 100 percent of her calls. His calculations excluded any income unrelated to the toll free number (i.e., the 5 to 10 percent of her income that was derived from nontelephone sources).

On cross-examination, Levin conceded his figures could be off by an error rate of plus or minus 3 percent. Appellants counsel attempted to demonstrate that this error rate was in fact greater since several calls listed as missed calls in the audit report appeared in Salvins message books as received calls. Levin acknowledged that his figure for lost income for the period between May 1st and June 15, 1998, was based on an average of lost calls because Salvin did not have handwritten message pads for that period. He admitted his method for calculating lost income was not based on any studies or literature.

Taffy Delgado, who handled customer billing for appellant, testified that calls on the computerized list would not appear on Salvins message pads if the caller had left a different call back number or had not left a message.

Elizabeth Diakun Head, appellants tariff and regulatory manager, identified the tariffs on file with the PUC and FCC. She examined Salvins message pads, counted a total of 4,010 messages, and suggested that Salvin had not lost as many messages as she claimed. She claimed that Levins telephone audit contained 236 duplicate telephone numbers.

The trial court found in favor of Salvin, ruling that appellant had breached its contract to provide a reliable voicemail system. The court rejected appellants argument that the damages claimed were not within the contemplation of the parties when entering the contract: "Ms. Salvin testified, without contradiction, that before entering the contract she received assurances from [appellant] that the toll free number could be used on her radio broadcast and that the messages from calls . . . would be reliably recorded and stored for her later retrieval. Her clearly communicated intent to use the telephone line for that purpose, and her reliance on the assurances of [appellant] that she could, are manifest. Therefore, any damages awarded Ms. Salvin would be . . . those which would naturally arise from the breach, or . . . have been reasonably contemplated or foreseen by both parties, at the time they made the contract, as the probable result of the breach."

Regarding Levins expert testimony, the court found that the comparison of appellants records with Salvins message pads did not require expert testimony, but that the analysis of that comparison was within the expertise of a CPA. The court admitted his expert testimony, "to be accorded whatever weight the court found appropriate after listening to his expert analysis and opinions."

The court rejected appellants arguments that the damages sought by Salvin were not reasonably certain. The court acknowledged the possibility of mistakes in Levins documentation, stating that his analysis "did not produce a perfect bottom line" such that his calculation of lost income "must be accepted by this court without its own consideration and thought." The court found, however, that Levins analysis was credible and there was a reasonable probability that the lost profits calculated by him would have been earned by Salvin if the breach of contract had not occurred. The court ruled that his calculation of damages in the amount of $152,479 in lost income "during the relevant period while a good approximation, in fairness to [appellant], must be reduced by 20%." After this reduction, the court awarded Salvin damages in the amount of $121,983.20, stating: "The court in reaching this figure has allowed for duplicate numbers, the possibility that a number left on the voice mail was different than that from which the person called, the possibility that some of Ms. Salvins calls were lost during a period when her credit card was declined or when her account balance went to zero . . . , etc."

The court rejected appellants contention that Salvin was precluded from seeking damages by the limitation of liability clauses contained in tariffs on file with the PUC and FCC. Following post-judgment motions, the court reduced the damages to $98,132 based on application of the two-year statute of limitations.

I. Sufficiency of the Evidence to Support the Award of Damages

Appellant first contends that insufficient evidence was presented at trial to support the award of damages. Appellant argues the only evidence supporting Salvins claim of lost voicemail messages was her own handwritten message books. Although she claimed to have lost nearly half of her 4,203 voicemail messages between May of 1998 and June of 2000, appellant states that its evidence showed she received over 4,010 messages during this period. Appellant states the record was replete with possible explanations for why its telephone records did not match Salvins message books. Appellant adds that Salvins testimony was not credible and should not have been accepted by the trial court.

We review claims of insufficient evidence under the substantial evidence rule. Our review begins and ends with a determination of whether there is any substantial evidence, contradicted or uncontradicted, that will support the conclusion reached by the trier of fact. We do not reweigh the evidence or consider the credibility of witnesses. We indulge in every legitimate inference from the evidence that supports the judgment and disregard any conflicting evidence. (Mariscal v. Old Republic Life Ins. Co. (1996) 42 Cal.App.4th 1617, 1622-1623.) Evidence is substantial where it is "of ponderable legal significance," reasonable, credible and of solid value. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) "Inferences may constitute substantial evidence, but they must be the product of logic and reason. Speculation or conjecture alone is not substantial evidence." (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.)

Here, the award of damages is supported by the testimony of Salvin and Levin. Levins audit of the telephone records demonstrated that Salvin missed voicemail messages. He conducted an analysis of her tax returns and profit and loss statements to determine the amount of income lost as a result of the lost messages. His analysis was corroborated by the fact that her income rose substantially after she terminated appellants services and by appellants admission to Salvin on different occasions that its computer system malfunctioned. Appellant did not conduct its own thorough audit of the telephone records or present evidence that its system had not failed to accurately capture and store messages left for Salvin. Consequently, the record does not show that Salvins testimony or Levins analysis was inherently improbable or implausible. The court properly credited this testimony. (See, e.g., Evje v. City Title Ins. Co. (1953) 120 Cal.App.2d 488, 492.)

Although appellants evidence suggested that Salvin recorded over 4,000 messages in her message books, the trial court properly credited Salvins testimony that she used those books to record telephone messages from other sources in addition to the messages she was able to retrieve from her voicemail.

Appellant also contends the court erred in awarding damages for an eight-day period between March 16 and 24, 2000, because Salvin produced no evidence that she lost voicemail messages during this period. However, the trial courts amended statement of decision expressly states that the judgment reflects damages for the relevant time period ending March 15, 2000. Additionally, given that the court reduced Salvins damages by 20 percent (the court used the phrase "etc." to reflect unspecified reasons for reducing the judgment), it is reasonable to conclude that the lost calls during this short period were included as one of the reasons for the reduction.

Finally, appellant contends that because Salvin did not produce a profit and loss statement for 1998, the court should not have awarded damages for 1998. Other evidence was admitted, however, showing business income during that year. Levin testified as to the amount of Salvins business income during 1998, and referred to her bank statements and tax returns for that year as part of the foundation for his testimony. This contention is without merit.

II. Admission of Salvins Expert Testimony

Appellant next contends the trial court erred in admitting the expert testimony of Levin on the issue of lost voicemail messages and lost income over its objection. Appellant argues that his analysis of the number of lost telephone messages did not require the special knowledge, skill, experience or training of an expert. Appellant adds that because Levin is not an economist he is not qualified to render an opinion on the issue of lost income. Appellant argues that his lack of qualification is reflected in the simple analysis he conducted to determine Salvins lost income , i.e., applying the same percentage of lost calls to her income to arrive at the amount of lost profits. We disagree.

Evidence Code section 801, subdivision (a) provides that if a witness is testifying as an expert, his testimony in the form of an opinion is limited to such an opinion as is "[r]elated to a subject that is sufficiently beyond common experience that the opinion of an expert would assist the trier of fact." The trial court has broad discretion whether to admit or exclude expert opinion testimony. On appeal, we review the courts ruling for a clear abuse of discretion, evaluating whether the ruling exceeded all bounds of reason. (Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 972.)

Here, the trial court found that Levins comparison of the telephone records did not require expert testimony, but that the analysis of that comparison was within the expertise of a CPA. In weighing his opinions, the court held, "Mr. Levin explained to this Courts satisfaction how he and Ms. Salvin accounted for her product sales, i.e., sales of candles, on her Profit and Loss Statements and in her tax returns, which she voluntarily produced. Ms. Salvins actual earned income from her psychic services and product sales as testified to by Mr. Levine for the years 1998, 1999, 2000 and 2001 are determined by the Court to be credible and reasonable. Therefore the Court finds that Mr. Levines factual and expert analysis as set forth in his Telephone Audit (Exhibit 12), the Kayla Productions Calculations of Income Shortage Due to Lost Calls (Exhibit 11), his graph showing Ms. Salvins increase in income after [terminating appellants] services, and the Profit and Loss Statements were all credible and reasonable and that Ms. Salvin did, in fact, lose voice mail messages throughout the relevant time period . . . and . . . there is a reasonable probability that the lost profits calculated by Mr. Levine would have been earned by Ms. Salvin except for the breach."

We conclude the trial court acted reasonably in determining that the analysis of the extensive telephone records, profit and loss statements, and tax returns fell within the knowledge, training, education, skill, and experience of a CPA. The court did not blindly accept Levins expert opinions on the issue of lost income, but rather gave those opinions the weight it believed was appropriate. The court made an independent determination of the loss and reduced the damages sought by 20 percent. There was no abuse of discretion.

III. Certainty of the Damages

Appellant next contends the trial court erred in concluding that Salvin suffered damages that were reasonably certain. (See Civ. Code, § 3301 [damages recovered for a breach of contract must be clearly ascertainable in both their nature and origin].) Appellant argues that Levins analysis was speculative in that it assumed the percentage of lost income was proportional to the percentage of lost calls, and he did not rely on any scientific research, studies, literature, or other form of investigation. For the reasons expressed in the courts statement of decision, we disagree.

It is well settled that an innocent party damaged by the acts of one who breaches a contract "will not be denied recovery simply because precise proof of the amount of damage is not available. The law only requires that some reasonable basis of computation be used, and will allow damages so computed even if the result reached is only an approximation." (Milton v. Hudson Sales Corp. (1957) 152 Cal.App.2d 418, 434; Stott v. Johnston (1951) 36 Cal.2d 864, 875.) Courts have held that, in estimating loss of income, the volume of business done in the past and the percentage of profit made thereon are properly considered. (E.g., Hacker etc. Co. v. Chapman V. Mfg. Co. (1936) 17 Cal.App.2d 265, 267-268.)

Here, Salvin had been in business for over four years before contracting with appellant and consistently earned income through the use of appellants voicemail system. The evidence showed that after terminating appellants services, Salvins income substantially increased, corroborating her claim of lost income. The method employed by Levin in computing Salvins damages was reasonable under the circumstances and properly considered by the trial court. As noted above, the court independently reduced Levins approximation of the damages by 20 percent (almost $25,000) to allow for errors, duplicate calls and other factors. Appellant offered no alternative method of calculating damages. In short, appellant has not demonstrated the damages were speculative or uncertain, or that Levins method of calculating the damages was unreasonable.

IV. Applicability of the PUC Tariff

Appellant next contends the trial court erred in concluding that the tariff it filed with the PUC did not limit its liability to Salvin for lost messages. We disagree.

Section 16.6 of the PUC tariff provides that the company shall not be liable for any consequential damages under the tariff "including, but not limited to, loss of revenue or profits, for any reason whatsoever, including the breakdown of facilities associated with the service, or for any mistakes, omissions, delays, errors, or defects in transmission occurring during the course of furnishing service."

The trial court found that the state tariff did not limit Salvins damages because the calls coming into her toll free line were interstate calls. The court stated: "Ms. Salvin testified that her service was for toll free calls from anywhere in the United States, including Alaska and Hawaii, and even Puerto Rico; that her . . . service was nationwide. . . . Ms. Delgado . . . testified that the service was one that routed all in-coming calls through a service center located in the State of Texas and required that to retrieve messages the customer called a number which went through that same Texas service center. She testified that the switch was in Texas. She further testified that a person in California would dial Ms. Salvins toll free number and leave a message at [appellants] Texas service center. Ms. Salvin would then dial the same toll free number from California and retrieve those messages stored in [appellants] Texas facility. [¶] The parties agree that the PUC Tariff applies only to intrastate calls made within the State of California, but [appellant] argue[s] that any calls which originated in California and were routed back to a California location qualify as intrastate calls under the PUC Tariff. The Court disagrees with [appellants] interpretation of the Tariff and holds that all calls coming into Ms. Salvins toll free line are interstate calls. For that reason, the PUC Tariff does not apply to provide [appellant] with a limitation on [its] liability to Ms. Salvin."

The plain wording of the PUC tariff states that it applies only to intrastate services in California and not to nationwide interstate services. (See exhibit 110, PUC tariff, § 3.1 [tariff regulations and rates apply to telecommunications between points within California].) It was undisputed that the point of termination of all telephone calls placed by California residents to Salvins toll free number was in Texas at the location of appellants voicemail service center and equipment. Similarly, Salvin accessed her messages by calling the toll free number and retrieving her messages from a point in Texas. (E.g., Petition for Emergency Relief and Declaratory Ruling Filed by the BellSouth Corporation, 7 FCC Rcd. 1619 (1992) [state regulation of Georgia companys voicemail service is preempted because the service can be called and accessed outside Georgia].)

Appellant asserted the applicability of the PUC tariff as an affirmative defense in the court below and had the burden of demonstrating its applicability. Appellant presented no evidence, expert or non-expert, demonstrating that calls placed from California to its Texas service center and then retrieved by Salvin are actually intrastate calls. Similarly, it cites no authority on appeal demonstrating this point. The court did not err.

V. Applicability of the FCC Tariff

Finally, appellant contends the trial court erred in concluding that the FCC tariff did not bar Salvins claim for damages. We disagree.

The entity that filed the tariff with the FCC was Advanced Communications Group, Inc. (ACG), a parent company of appellant. Although the parties stipulated the tariff was filed on behalf of appellant, Salvin disputed whether the tariff applied to the services rendered by appellant. A review of the 52-page document reveals that its provisions are inapplicable to the services rendered by appellant. As the trial court noted, "It is obvious from a reading of the Tariff that the services offered by ACG which would come within the scope of the ACG FCC Tariff are quite different in many respects from the services provided by [appellant] to Ms. Salvin." Indeed, the tariff provides: "This tariff includes the rates, charges, terms and conditions of service for the provision of interstate communications service by [ACG] and the issuing carriers as listed herein between certain locations in the United States." ACG did not provide any service to Salvin. Appellant is not listed as an issuing carrier or even referenced anywhere in the tariff.

Section 2.2.3 of the FCC tariff, entitled Limitation on Service, provides: "The Company does not undertake to transmit messages, but offers the use of its service when available, and, as more fully set forth elsewhere in this tariff, shall not be liable for errors in transmission or for failure to establish connections." In concluding that the tariff did not apply to the services rendered by appellant, the trial court found that this provision "shows there was no intent that the Tariff apply to services like Ms. Salvins where the sine qua non of her service is the nationwide voice mail message aspect of it in which defendants would accurately capture and store telephone messages left for Ms. Salvin on its system for her later retrieval of all of those messages." We agree. The sole service offered by appellant was to transmit and store messages. There was no evidence that appellant provides any other type of service. We conclude appellant has not carried its burden of demonstrating that the tariff is applicable.

The judgment is affirmed. Costs on appeal are awarded to Salvin.

We concur: GILBERT, P.J., PERREN, J.


Summaries of

Salvin v. Ionex Telecommunications, Inc.

Court of Appeals of California, Second District, Division Six.
Nov 3, 2003
2d Civil No. B160662 (Cal. Ct. App. Nov. 3, 2003)
Case details for

Salvin v. Ionex Telecommunications, Inc.

Case Details

Full title:LINDA SALVIN, Plaintiff and Respondent, v. IONEX TELECOMMUNICATIONS, INC.…

Court:Court of Appeals of California, Second District, Division Six.

Date published: Nov 3, 2003

Citations

2d Civil No. B160662 (Cal. Ct. App. Nov. 3, 2003)