Copart, Inc. v. Sparta Consulting, Inc. (339 F. Supp. 3d 959, 2018)

Kimberly J. Mueller, UNITED STATES DISTRICT JUDGE

In this order the court resolves four issues reserved by the parties or raised by the parties by motion following the jury verdict handed down on May 22, 2018. ECF No. 497. Specifically, the court addresses the following: a limitation of liability clause in a contract between Copart, Inc. and Sparta Consulting, Inc.; Copart's equitable unjust enrichment and California Unfair Competition Law (UCL) claims; the question of prejudgment interest to Sparta on its successful breach of the implied covenant of good faith and fair dealing claim against Copart; and dismissal of Copart's trade secrets misappropriation claim. The court provides its conclusions and reasoning below.

I. BACKGROUND

A. Trial

At trial, the court gave the jury Preliminary Instruction No. 2, which the court excerpts below:

In this action, the plaintiff and counterdefendant is Copart, Inc. The defendants in this case are Sparta Consulting, KPIT Infosystems, Inc. and KPIT Technologies Ltd. Sparta is also the counterplaintiff in this action.

Copart processes damaged or donated vehicles that it then sells for insurers or nonprofit organizations during online auctions. Sparta designs and builds custom business management software systems for companies. KPIT Infosystems is Sparta's parent company, and KPIT Technologies is Sparta's parent company's parent, or grandparent.

....

In October 2011, Copart hired Sparta to design a new business management software system to replace Copart's existing software system. Following the completion of the design, Copart hired Sparta to build the new system. Before Sparta finished building the new system, in September 2013, Copart terminated the contract with Sparta.

Copart and Sparta have sued each other for damages related to the project. Copart has also sued Sparta's parent company, KPIT Infosystems, and its parent company's parent, KPIT Technologies.

Copart contends that it is owed money by Sparta for fraud, professional negligence, breach of contract, breach of the implied covenant of good faith and fair dealing, violations of computer fraud statutes and other misconduct. Copart also contends that it is owed money by KPIT Infosystems and KPIT Technologies for misappropriation of trade secrets, violations of computer fraud statutes and other misconduct. Sparta and the KPIT entities deny Copart's claims.

Sparta claims that Copart has failed to pay money that it owes to Sparta for work performed on the new software system. Copart denies that it owes anything to Sparta.

Preliminary Instruction No. 2, ECF No. 398 at 3-4.

Copart and Sparta executed multiple contracts during their business relationship. One of these agreements was the Implementation Services Agreement (ISA). Trial Ex. JX-1 (JX-1 ). Under the parties' agreements, Sparta would complete numbered "milestones" by certain dates, Copart would approve those milestones and Copart would pay a fee to Sparta for completion. See ISA §§ 1.22-1.24, 3.1, 4.1-4.4, 9.1. The first four milestones comprised a design phase for the new business management software system. See JX-2 (Design Statement) at 25; D-1055. The remaining milestones, Milestones 5 through 15, comprised the build phrase for the software system. JX-3 (Build Statement or Realization Statement) at 33. Copart paid Sparta $11,364,460.88 for completing Milestones 1 through 7. Copart terminated Sparta "for convenience" on September 17, 2013 without paying any other milestone fees. ISA § 15.2; D-301-1. The parties dispute how much work Sparta completed before Copart terminated Sparta. See, e.g. , P-1041.

Before trial, the court ordered "the parties to meet and confer and provide, by the first day of trial, a joint annotated version of the relevant contracts, or their competing versions, showing contract terms the parties request be construed either by the court or the jury." Order on Mot. in Lim. and Mot. to Bifurcate, ECF No. 390 at 18, 51. The parties "exchanged terms that [they] believe[d] the court or the jury can interpret," and the court directed the parties to provide a joint binder reflecting which contract provisions the court should construe and which provisions the jury should interpret. April 23 Trial Tr. at 41:19-43:20, ECF No. 414. The court received this jointly annotated binder, listing Copart and defendants' positions as to multiple contract provisions. For ISA § 18, only defendants have presented a position: "This section should be interpreted by the [c]ourt, consistent with the [c]ourt's prior interpretation of this [s]ection as set forth in the Summary Judgment Order [ECF No. 264 at 16], and as set forth in [d]efendants' Trial Brief [ECF NO. 383 at 22-24]." Long Decl. Ex. A at 17, ECF No. 519-1.

ISA § 18 is a limitation of liability clause. Defendants had initially proposed an instruction on this clause, ECF No. 388 at 98-100 (defendants' proposed instruction and Copart's objections), but the parties later agreed the court would construe this clause following trial, instead of putting it before the jury. See May 11 Trial Tr. at 56:7-15, ECF No. 471; May 16 Trial Tr. at 244:25-248:4, ECF No. 482; see also May 17 Trial Tr. at 3:22-4:3, ECF No. 490 (confirming parties' agreement, that "as needed, the [c]ourt will conduct essentially a bench trial," making "any legal decisions" but "to the extent there are any factual decisions," the court also would make those).

When discussing Copart's unjust enrichment and UCL claims with the court, Copart at one point stated, "We'd like the jury to decide the facts and for those facts then to be binding on the [c]ourt with respect to its determination." May 11 Trial Tr. at 19:13-15. Defendants stated their view was that the court "should decide those claims" as "equitable" claims. Id. at 19:17-21. The court stated it had contemplated "the latter" view and would let the parties know if that changed. Id. at 19:22-25.

Regarding prejudgment interest for an award on contract claims, defendants asserted this interest was "an issue for the [c]ourt to decide." May 11 Trial Tr. at 57:9-10. The parties later jointly agreed to the court's deciding prejudgment interest, "[e]ven the fact of" prejudgment interest, "[e]ntirely." May 16 Trial Tr. at 225:7-12, 226:3-15.

During trial, Copart withdrew its trade secrets misappropriation claim. ECF No. 468 at 1 (discussing "Copart's withdrawal of its trade secret misappropriation [claim]," offer to stipulate to dismissal with prejudice and request that "this particular dispute be the focus of motion practice after trial, on a full record"). The parties agreed Copart's withdrawn trade secrets misappropriation claim "should not go to the jury" and that they would address whether the court should dismiss "with prejudice or without prejudice ... after trial." Id. at 5:21-24.

The court granted defendants' "motion for judgment as a matter of law" as to Copart's agency claims. May 14 Trial Tr. at 5:9-14, ECF No. 476.

After closing arguments, the court provided the jury its final instructions. See Final Jury Instructions (Instructions), ECF Nos. 485, 488 (correcting Instruction Nos. 45 and 52, and adding Instruction No. 51A).

The jury reached a verdict, finding Sparta liable for "fraud against Copart in the form of concealment" and awarding Copart $4.69 million. Verdict Form at 2, ECF No. 497. The jury also found Sparta committed professional negligence and awarded Copart $20.37 million. Id. at 4. But the jury found Copart "20%" responsible for this negligence. Id. The jury awarded Sparta $4.88 million for Copart's breach of the implied covenant of good faith and fair dealing based on Sparta's work performed and completed and unreimbursed expenses. Id. at 8; Instruction No. 52; ISA § 15.2

B. Post-Verdict Briefing and Hearing

After the verdict, Copart and defendants filed briefs addressing four issues: (1) the application of ISA § 18, the limitation of liability clause, to the jury verdict; (2) defendants' liability under Copart's unjust enrichment and UCL claims; (3) Sparta's entitlement to prejudgment interest for its successful breach of the implied covenant of good faith and fair dealing counterclaim; and (4) whether Copart's withdrawn trade secrets claim should be dismissed with prejudice. See ECF Nos. 503 (defendants' brief), 505 (Copart's brief). The court held a hearing on these issues on July 13, 2018. ECF Nos. 510, 515. After the hearing, Copart and defendants submitted supplemental briefs, then final reply briefs. ECF Nos. 516, 518, 520, 521.

The court resolves the four issues below.

II. LEGAL STANDARD

The Seventh Amendment provides that "no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law." U.S. Const. amend. VII. According to the Ninth Circuit, "it would be a violation of the Seventh Amendment right to jury trial for the court to disregard a jury's finding of fact." Acosta v. City of Costa Mesa , 718 F.3d 800, 828 (9th Cir. 2013) (citing Floyd v. Laws , 929 F.2d 1390, 1397 (9th Cir. 1991) ). "Thus, in a case where legal claims are tried by a jury and equitable claims are tried by a judge, and the claims are 'based on the same facts,' in deciding the equitable claims 'the Seventh Amendment requires the trial judge to follow the jury's implicit or explicit factual determinations.' " L.A. Police Protective League v. Gates , 995 F.2d 1469, 1473 (9th Cir. 1993) (citation omitted).

"Where 'substantial commonality' exists between the factual questions presented by legal and equitable claims, jury findings pertaining to the legal claims constrain the court's determination of equitable claims." Duhn Oil Tool, Inc. v. Cooper Cameron Corp. , 818 F.Supp.2d 1193, 1204 (E.D. Cal. 2011), reinstating jury verdict on reconsideration in part , No. 05-CV-1411-MLH (GSA), 2012 WL 13040409 (E.D. Cal. May 7, 2012) (citation omitted); see Tu Thien The, Inc. v. Tu Thien Telecom, Inc. , No. CV1109899MWFJEMX, 2014 WL 12580249, at *7-9 (C.D. Cal. July 11, 2014) (reasoning "[t]he UCL claims are based on the same factual allegations as the trademark claims decided by the jury," finding UCL violations consistent with the jury verdict on trademark claims and concluding the UCL "remedies are redundant with those awarded under the trademark claims").

III. ANALYSIS

A. New Evidence and the Seventh Amendment

Copart contends the court "can-and should-consider evidence that was not admitted during the jury trial" in resolving "equitable claims and legal issues that were not presented to the jury." ECF No. 516 at 2. Defendants assert the Seventh Amendment precludes examining new evidence that would in effect re-examine any fact tried by the jury and impermissibly contradict the jury's verdict. ECF No. 518 at 3 n.4.

Copart's citation to Consumerinfo.com, Inc. v. Chang , No. CV 09-3783-VBF(MANX), 2011 WL 13190163, at *1 (C.D. Cal. June 3, 2011), does not support its position. Notwithstanding its at most persuasive status, in Chang , the court "held a bench trial on equitable issues, and allowed the parties to introduce new evidence and argument on the issues to be tried." Id. The case did not involve a dispute about the jury's factual determinations and how those bind a court's ruling on equitable issues. Rather, the court referred to new evidence presented on equitable issues to support a party's lack of consent to try an issue because that party "had voluntarily dismissed its counterclaims before its opportunity to present evidence closed." Id. (emphasis removed).

The case of State Auto Mut. Ins. Co. v. McIntyre , 652 F.Supp. 1177, 1178-79 & n.2 (N.D. Ala. 1987), also does not persuade this court to consider new evidence not admitted at trial, because that case involved a declaratory judgment action as a bench trial where plaintiff insurance company sought to exclude coverage under a homeowner's insurance policy in relation to an underlying tort action for sexual abuse tried before a jury. There, final judgment was entered on the underlying action and that trial was pending on appeal before the court issued its opinion under Federal Rule of Civil Procedure 52. Id. at 1179.

Nor does Copart's third example case, Synopsys, Inc. v. ATopTech, Inc , No. 13-CV-02965-MMC, 2016 WL 6158216, at *2 n.4 (N.D. Cal. Oct. 24, 2016), shift the calculus. There, the court stated "[i]t was the court's understanding, as well as [defendant's], that evidence relevant only to equitable estoppel would not be introduced at the jury trial," meaning "a finding against [defendant] in that earlier proceeding...would not serve to bar a finding based on additional evidence offered at the bench trial." Id.

To understand how ATopTech is distinguishable from this case, it is important to understand the process for finalizing jury instructions here. The parties proposed jury instructions and verdict forms contemplating instructing the jury on ISA § 18, as well as Copart's unjust enrichment claim and Copart's UCL claim. See ECF Nos. 370 at 77-81 (Copart's proposed instructions on UCL and unjust enrichment), 371 at 8-10 (Copart's proposed verdict form for unjust enrichment and UCL liability and restitution), 374 at 76-77, 82 (defendants' proposed final instructions for unjust enrichment and limitation of liability under ISA § 18). The court began discussing final jury instructions with the parties after Copart rested its case-in-chief. See May 10 Trial Tr. at 10:23-11:21, ECF No. 460 (Copart resting); May 11 Trial Tr. at 17:23-63:20 (first working session on jury instructions). Defendants rested before the court finalized discussions regarding instructions and ruling on formal objections by the parties. See May 16 Trial Tr. at 213:3-12 (defendants' resting and Copart's resting), 224:22-259:7 (second working session to finalize jury instructions).

In other words, the parties here had a different understanding than the defendant in ATopTech , 2016 WL 6158216, at *2 n.4. At the time Copart presented its case-in-chief, Copart had proposed instructing the jury and obtaining a jury verdict on its unfair competition and UCL claims. Copart also had notice of defendants' proposed limitation of liability instruction based on ISA § 18. Likewise, defendants presented their entire case before the parties agreed that the court, not the jury, should decide how ISA § 18 applied to the parties' claims and defenses, if at all. Although defendants understood Copart's unjust enrichment and UCL claims would not go to the jury before defendants rested, defendants knew the court had not yet clearly decided whether the jury's factfinding would bind the court or the court would conduct independent factfinding. See May 11 Trial Tr. at 19:22-25.

Considering the procedural history here, the court follows Ninth Circuit authority and considers new evidence only where "the legal and equitable claims do not involve common issues." Granite State Ins. Co. v. Smart Modular Techs., Inc. , 76 F.3d 1023, 1027 (9th Cir. 1996) (citation omitted); see Danjaq LLC v. Sony Corp. , 263 F.3d 942, 962 (9th Cir. 2001) (concluding district court "did not tread on" the "right to a jury trial" where the court "ruled as a matter of law" and stated "[t]he purpose of the hearing [on the equitable defense] was not to weigh evidence"); Sierra Pac. Power Co. v. Hartford Steam Boiler Inspection and Ins. Co. , No. 03:04-CV-00034-LRH-RAM, 2014 WL 4699564, at *3 n.5 (D. Nev. Sept. 19, 2014) (declining to consider document not admitted at bench trial before appeal when making factual determination of dam project depreciation after Ninth Circuit remand), amended in part , 2014 WL 6883056 (Dec. 5, 2014), order clarified , 2015 WL 476294 (Feb. 5, 2015), aff'd in relevant part , 673 F. App'x 739, 741 (9th Cir. Dec. 23, 2016).

B. Limitation of Liability Clause

1. New Evidence: Contract

Copart contends the court "must consider extrinsic evidence relative to the scope of" ISA § 18. ECF Nos. 505 at 32-33; ECF No. 516 at 6 (citing ECF No. 422). Copart requests the court rely on exhibits P-54 and P-63, which were not admitted at trial. See Takenouchi Suppl. Decl. (TSD) TSD Exs. K-L, ECF Nos. 517-11, 517-12; ECF No. 483-1 (Admitted Exhibits List). Copart characterizes TSD Exhibit L as a "redline rejecting Sparta's proposed language for [ISA § 18]" during contract negotiation. ECF No. 516 at 5 n.12.

Defendants object to Copart's supplying drafting history of the ISA in P-54, only now, post-trial. ECF No. 503 at 6; ECF No. 509 at 1. Defendants refer to the party's responses during trial to the court's request for a joint submission on contract interpretation issues, in which Copart offered no suggestion on how to interpret ISA § 18. ECF No. 518 at 2 n.2 (citing Long Decl. Ex A at § 18, ECF No. 519-1; ECF Nos. 502, 503, 505). Additionally, defendants assert "Copart has never argued that [ISA § 18] is ambiguous, and therefore cannot now offer extrinsic evidence ... to interpret the clear provision").

Copart is correct that "it is reversible error for a trial court to refuse to consider such extrinsic evidence on the basis of the trial court's own conclusion that the language of the contract appears to be clear and unambiguous on its face." Wolf v. Superior Court , 114 Cal. App. 4th 1343, 1351, 8 Cal.Rptr.3d 649 (2004), as modified on denial of reh'g (Feb. 19, 2004); see also Halicki Films, LLC v. Sanderson Sales & Mktg. , 547 F.3d 1213, 1223 (9th Cir. 2008) (citing Morey v. Vannucci , 64 Cal. App. 4th 904, 913, 75 Cal.Rptr.2d 573 (1998) ). And "[e]xamination of prior drafts of a contract to show an intentional omission of a term in the final version is accepted under California law, even when the contract was fully integrated." Wells v. Hair Sols. By M E, Inc. , No. LACV1200996JAKPLAX, 2012 WL 12882426, at *5 (C.D. Cal. Dec. 28, 2012) (citing City of Stockton v. Stockton Plaza Corp. , 261 Cal. App. 2d 639, 643, 68 Cal.Rptr. 266 (1968) ).

At the same time, defendants are correct that Copart did not suggest a need for extrinsic evidence to interpret the contract during trial, and Copart never has "contended that [ISA § 18] is ambiguous." See, e.g. , Long Decl. Ex. A at 17 (joint annotated ISA, containing annotations from each party as to which sections should be construed by the court and which should be interpreted by the jury but reflecting a position by defendants only as to interpreting ISA § 18); May 11 Trial Tr. at 56:7-15; May 16 Trial Tr. at 244:25-48:4; ECF No. 388 at 99-100 (Copart's objections to defendants' proposed instruction on ISA § 18). Copart even concedes it "has consistently asserted that [ISA § 18] is unambiguous in that it does not, on its face, apply to the jury's professional negligence award." ECF No. 520 at 3. At summary judgment, a party can waive an argument that contract language is ambiguous by failing to brief an issue. See Paragon Tank Leasing, LLC v. Riccelli Enterprises, Inc. , No. 09-CV-513, 2010 WL 2181315, at *2 (E.D. Wisc. May 25, 2010). Similarly here, Copart's declining the court's offer to instruct the jury on ISA § 18 could have waived an argument that the jury should have interpreted ISA § 18 as an ambiguous clause. See United States v. Guthrie , 931 F.2d 564, 567 (9th Cir. 1991) (trial court offered to give omitted instruction, but defendant rejected offer); United States v. Baldwin , 987 F.2d 1432, 1437 (9th Cir. 1993) (government offered omitted instruction, but defendant rejected it). But see United States v. Budziak , 697 F.3d 1105, 1110 (9th Cir. 2012) (finding no "invited" error because the record did "not reflect that [defendant] intentionally abandoned or rejected the element of [an] instruction he now asserts the court should have included").

Regardless, the court's duty under California contract law is to provisionally receive extrinsic evidence to interpret the contract. The court will provisionally receive Copart's offered exhibits when it construes ISA § 18 below. Before engaging in that construction, the court considers other possible waivers by defendants and by Copart.

2. Waiver by Defendants

Copart asserts defendants "waived [their] argument that" ISA § 18(A) permitted "only 'market-based' damages-i.e. , the difference in value between the system as promised and as delivered." ECF No. 516 at 5 (emphasis in original). Copart relies on defendants' proposed jury instructions to support its argument. Id.

Copart is correct that defendants' proposed limitation of liability instruction only proposed a complete bar to "lost profits" damages. See ECF No. 374 at 76. Defendants also proposed an instruction listing "Copart's internal labor" and "Copart's internal expenses" as available items of damages for professional negligence and fraud claims. ECF No. 374 at 72. These proposed instructions reflect a position that the "indirect, incidental, special, or consequential damages" prohibited under ISA § 18(A) only prohibit lost profits, at least in this case. The court's review of the complete proposed instruction discloses defendants accounted for ISA § 18(B)(X)-(Y) by including a direction to the jury that it "in no event shall" it award damages "of any type that exceed the greater of (a) $5,000,000 or (b) amounts actually paid or payable by Copart to Sparta pursuant to the ISA." ECF No. 374 at 76. Although the parties agreed to resolve the application of ISA § 18 after the jury verdict, this agreement occurred well after defendants had submitted proposed final jury instructions. Compare ECF No. 374 (filed April 9), with May 11 Trial Tr. at 56:7-15, and May 16 Trial Tr. at 244:25-248:4. Without any notice to Copart that defendants held a different view than that advanced in their proposed final instructions, Copart had no means to ensure it presented evidence of market-based damages if necessary. See Bowoto v. Chevron Corp. , 621 F.3d 1116, 1129 (9th Cir. 2010) ("Plaintiff cannot now claim the district court erred by not providing an instruction they never offered."); Taddeo v. Koval Flamingo, LLC , No. 212CV01110APGNJK, 2016 WL 6272367, at *3 (D. Nev. Oct. 25, 2016) ("If [defendant] believed that the jury needed to make findings about the value of the [plaintiffs'] home to prove fraud damages-which is the issue it raised in both its post-verdict motion and its motion for reconsideration-then the proper time to raise this issue was before the jury deliberated."). Defendants have waived the argument that ISA § 18(A) precludes damages other than lost profits.

Copart also asserts defendants have waived argument challenging the sufficiency of damages under a "market-based" measure. ECF No. 516 at 4-5 (citing ECF No. 503 at 12). According to Copart, "Sparta did not move pre-verdict for" judgment as a matter of law "on the sufficiency of evidence on this point." Id. at 5. In essence, Copart argues for waiver under Federal Rule of Civil Procedure 50(a). See ECF No. 516 at 5 (citing Fed. R. Civ. P. 50(a)-(b) ).

Rule 50(a) applies "[i]f a party has been fully heard on an issue during a jury trial." Fed. R. Civ. P. 50(a)(1) ; see Ritchie v. United States , 451 F.3d 1019, 1022-23 (9th Cir. 2006) (explaining difference between Rule 50(a), which applies to jury trials, and Rule 52(c), which applies to bench trials). Rule 50(a) waiver applies to a Rule 50(b) motion for judgment as a matter of law because that motion is a renewed 50(a) motion. E.E.O.C. v. Go Daddy Software, Inc. , 581 F.3d 951, 961 (9th Cir. 2009). "[A] party cannot properly 'raise arguments in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its preverdict Rule 50(a) motion.' " Id. (quoting Freund v. Nycomed Amersham , 347 F.3d 752, 761 (9th Cir. 2003) ); Zhang v. Am. Gem Seafoods, Inc. , 339 F.3d 1020, 1028-29 (9th Cir. 2003) ("The failure to raise this issue prior to the return of the verdict results in a complete waiver" for judgment as a matter of law under Rule 50 ). This court's order and the parties' arguments here do not invoke a Rule 50 motion for judgment as a matter of law. The court declines to determine waiver on this issue.

3. Waiver by Copart

Defendants assert Copart waived claims related to gross negligence, willful misconduct or "active" negligence because Copart never included those terms "in its pretrial statement, trial brief, or any proposed jury instructions." ECF No. 518 at 4-5; see Cargill Inc. v. Progressive Dairy Sols., Inc. , No. CV-F-07-0349-LJO-SMS, 2008 WL 4532436, at *4 (E.D. Cal. Oct. 8, 2008) (party's objection to submitting an issue to jury waived where issue was not included in pretrial statement, motions in limine , or during discussions about jury instructions and verdict form). Defendants also assert Copart admitted "the jury, not the [c]ourt had to make the factual determination of Sparta's negligence." ECF No. 518 at 5 (citing ECF No. 505 at 30).

Although defendants are correct that Copart did not raise these issues, the burden to show the limitation of liability clause applies is on defendants, as explained below and as argued by defendants themselves. ECF No. 518 at 4; Eriksson v. Nunnink , 233 Cal. App. 4th 708, 733-34, 183 Cal.Rptr.3d 234 (2015). Defendants bore the burden to show the limitation of liability existed and would apply to Copart's claims. Only then would Copart need to respond to show an exception to the limitation of liability clause applied. And Copart had objected to defendants' proposed instruction on the limitation of liability clause, distinguishing the facts here from those in Cargill . Compare ECF No. 388 at 99-100, with 2008 WL 4532436, at *4 (finding objection to giving a jury instruction waived in part because objecting party "failed to raise this issue ... at any time during the process of preparing jury instructions and the verdict form"). Given the need for both parties to manage the presentation of their cases, it is not surprising that Copart would not make a case for gross negligence, active or passive negligence and what constitutes willful misconduct. Until Copart's objection was resolved, all Copart could do was submit its strongest evidence to prove its professional negligence and fraud claims, then seek to rely on a gross negligence instruction if the court included defendants' proposed limitation of liability instruction that specifically references "grossly negligent." See ECF No. 374 at 76.

4. ISA § 18

Copart contends ISA § 18 does not affect the jury's professional negligence award in any respect. ECF No. 505 at 32-39. Defendants contend ISA § 18 covers all negligence except for gross negligence. ECF No. 518 at 2. Defendants' interpretation is correct, as explained below.

ISA § 18 reads:

18. LIMITATIONS OF LIABILITY . EXCEPT FOR A BREACH OF A PARTY'S OBLIGATIONS UNDER SECTION 11 OR SECTION 12, INDEMNIFICATION OBLIGATIONS UNDER SECTION 17, OR LIABILITY ARISING FROM A PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (INCLUDING WILLFUL BREACH OF THIS AGREEMENT), (A) NEITHER COPART NOR SERVICE PROVIDER SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATING TO ITS PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (B) IN NO EVENT SHALL EITHER PARTY'S CUMULATIVE LIABILITY ARISING OUT OF THIS AGREEMENT EXCEED AN AMOUNT EQUAL TO THE GREATER OF (X) $5,000,000 OR (Y) AMOUNTS ACTUALLY PAID OR PAYABLE BY COPART TO SERVICE PROVIDER PURSUANT TO THIS AGREEMENT.

JX-1 at 17.

"Under California law, '[t]he fundamental goal of contract interpretation is to give effect to the mutual intent of the parties as it existed at the time of contracting.' " Skilstaf, Inc. v. CVS Caremark Corp. , 669 F.3d 1005, 1015 (9th Cir. 2012) (quoting Miller v. Glenn Miller Prods., Inc. , 454 F.3d 975, 989 (9th Cir. 2006) (per curiam) ). "Because California law recognizes that the words of a written instrument often lack a clear meaning apart from the context in which the words are written, courts may preliminarily consider any extrinsic evidence offered by the parties." Id. at 989-90 ; see also Dore v. Arnold Worldwide, Inc. , 39 Cal. 4th 384, 391, 46 Cal.Rptr.3d 668, 139 P.3d 56 (2006) (" '[E]ven if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible,' " quoting Morey v. Vannucci , 64 Cal. App. 4th 904, 912, 75 Cal.Rptr.2d 573 (1998) ). "If the court decides, after consideration of this evidence, that the language of a contract, in the light of all the circumstances, is fairly susceptible of either one of the two interpretations contended for, extrinsic evidence relevant to prove either of such meanings is admissible." Pacific Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co. , 69 Cal. 2d 33, 40, 69 Cal.Rptr. 561, 442 P.2d 641 (1968). "If, however, the court decides that the contract is not reasonably susceptible to more than one interpretation, the court can reject the assertion of ambiguity." Skilstaf , 669 F.3d at 1015.

Additionally, "when parties enter an integrated written agreement, extrinsic evidence may not be relied upon to alter or add to the terms of the writing."

Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Ass'n , 55 Cal. 4th 1169, 1174, 151 Cal.Rptr.3d 93, 291 P.3d 316 (2013) (citing Cal. Code Civ. Proc. § 1856 and Cal. Civ. Code § 1625 ). This rule, commonly called the parol evidence rule, is a rule of substantive law, not of procedure. Casa Herrera, Inc. v. Beydoun , 32 Cal. 4th 336, 343, 9 Cal.Rptr.3d 97, 83 P.3d 497 (2004). "It is founded on the principle that when the parties put all the terms of their agreement in writing, the writing itself becomes the agreement." Riverisland , 55 Cal. 4th at 1174, 151 Cal.Rptr.3d 93, 291 P.3d 316. Because a contract's "written terms supersede statements made during the negotiations," evidence other than those written terms is "irrelevant, and cannot be relied upon." Id. (emphasis omitted).

The parol evidence rule applies only to "an integrated written agreement." Id. A written agreement is "integrated" or is an "integration" if it is "a complete and final embodiment of the terms of an agreement," Masterson v. Sine , 68 Cal. 2d 222, 225, 65 Cal.Rptr. 545, 436 P.2d 561 (1968) ; Alling v. Universal Mfg. Corp. , 5 Cal. App. 4th 1412, 1434, 7 Cal.Rptr.2d 718 (1992), or in other words, if it is "intended by the parties as a final expression of their agreement," Cal. Code Civ. Proc. § 1856(a). Here, both "the presence of an integration clause" at ISA § 19.10 and the contract's language in that clause shows the ISA is an integrated agreement. See Lennar Mare Island, LLC v. Steadfast Ins. Co. , 176 F.Supp.3d 949, 963 (E.D. Cal. 2016) (finding policy was "an integrated writing" because it was "comprehensive, refer[red] expressly to other policies when necessary," and included integration clause).

Extrinsic evidence may "explain[ ] or supplement[ ]" an integrated written agreement, but that evidence may not "contradict[ ]" the written agreement. Cal. Civ. Proc. Code § 1856(a) - (b).

And finally, "[l]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract." Foster-Gardner, Inc. v. Nat'l Union Fire Ins. Co. , 18 Cal. 4th 857, 868, 77 Cal.Rptr.2d 107, 959 P.2d 265 (1998) (internal citation and quotations omitted); see also Cal. Civ. Code § 1641 ("The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other").

As relevant here, "gross negligence" or "willful misconduct" are not limited by ISA §§ 18(A), 18(B)(X) or 18(B)(Y). But for all other conduct "arising out of or relating to [Copart or Sparta's] performance or failure to perform under" the ISA, no indirect, incidental, special or consequential damages are available as relief. ISA § 18(A). In proposing jury instructions, defendants proposed only lost profits as an item of damages that the jury could outright exclude from conduct arising out of or relating to the ISA. ECF No. 374 at 76 ("You shall not award any damages for lost profits against Sparta unless ...."). For other conduct that is not gross negligence or willful misconduct and "aris[es] out of the" ISA, no party's cumulative liability will exceed the greater of $5,000,000 or "amounts actually paid or payable by Copart" to Sparta under the ISA. ISA § 18(B)(X)-(Y).

A sister court in WeBoost Media S.R.L. v. LookSmart Ltd. , No. C 13-5304 SC, 2014 WL 824297, at *6 (N.D. Cal. Feb. 28, 2014), interpreted a similar limitation of liability clause incorporating language excluding "indirect, incidental, consequential, special or exemplary damages." There, the agreement's clause did "not read as prohibiting either party from recovery any type of damages, just most types of damages, and only up to a limit." Id. "Direct damages up to the amount paid under the contract are still allowed." Id. The court ruled, "regardless of whether [p]laintiff is ultimately able to recover on a tort or contract claim, [the limitation of liability provision] would cap [p]laintiff's damages to the amount it paid under the contract." Id. So too here.

Copart disputes defendants' position that the jury's professional negligence award "arises out of or relates to performance or failure to perform under the agreement." ECF No. 520 at 3 (citation omitted). Although Copart cites cases explaining that viable professional negligence claims are distinct from breach of contract claims, Copart's own evidence cited in its post-verdict briefing, and its evidence presented at trial, involve defendants' failures to perform under the contract between Copart and Sparta.

That the parties intended to exclude gross negligence from the limitation of liability clause makes sense given that California courts have held that limitations of liability for gross negligence violate public policy and are unenforceable. See, e.g. , City of Santa Barbara v. Superior Court , 41 Cal. 4th 747, 777, 62 Cal.Rptr.3d 527, 161 P.3d 1095 (2007).

The court addresses the parties' disputes about ISA § 18 below.

a) Active and Passive Negligence

Copart asserts ISA § 18 covers "passive" negligence but does not cover "active" negligence. ECF Nos. 505 at 32-33, 516 at 5, 520 at 2 (arguing "[t]he plain meaning of [ISA § 18] necessarily excludes 'active negligence' "). Defendants contend instead that ISA § 18 excludes only "gross negligence," leaving all other forms of negligence within its coverage. ECF No. 518 at 1.

Although Copart cites case law distinguishing between active and passive negligence, those cases, analyze "general" indemnity clauses that do "not state what effect [plaintiff's] negligence will have on [defendant's] obligation to indemnify." Rossmoor Sanitation, Inc. v. Pylon, Inc. , 13 Cal. 3d 622, 629, 119 Cal.Rptr. 449, 532 P.2d 97 (1975) ; Salton Bay Marina, Inc. v. Imperial Irrigation Dist. , 172 Cal. App. 3d 914, 931, 933, 218 Cal.Rptr. 839 (1985) (clause exempting party from liability "for any damage or injury caused or occasioned by" rising seas or flooding did not cover active negligence); Aeros Aeronautical Sys. Corp. v. United States , No. CV 15-1712, 2016 WL 10516020, at *2, 4 (C.D. Cal. June 20, 2016) (clause reading "[t]he Licensor will not be responsible for any lost, stolen, or damaged property of Licensee" did not cover active negligence). But if a limitation of liability clause mentioning negligence involves language that is "broad enough, an actor may disclaim liability for negligence of any type." Delta Air Lines, Inc. v. Douglas Aircraft Co. , 238 Cal. App. 2d 95, 101, 47 Cal.Rptr. 518 (1965). Here, ISA § 18 explicitly carves out "gross negligence" from the limitation of liability provision, distinguishing it from the authority Copart cites.

Copart also relies on Hoot Winc, L.L.C. v. RSM McGladrey Fin. Process Outsourcing, LLC , No. 08CV1559 BTM( ), 2009 WL 3805212, at *1 (S.D. Cal. Nov. 12, 2009). ECF No. 505 at 40. In Hoot Winc , the court held the limitation of liability clause could not apply to the extent plaintiffs alleged willful and wanton professional negligence, where the parties' limitation of liability clause limited liability "for damages whether based on breach of warranty or other contract, negligence, strict liability, other tort, breach of statute or governmental role, or any other legal or equitable theory...." Id. But that court applied Minnesota law, and the court did rule as a matter of law that the limitation of liability clause was "enforceable with respect to [p]laintiff's ... professional negligence claim to the extent it is premised on ordinary negligence." Id. at *2. This persuasive case supports defendants' contention that the limitation of liability clause here excludes only gross negligence or willful misconduct.

Copart cites to California Civil Code section 1668 to support its asserted distinction between active and passive negligence. But courts have construed section 1668 as a statute that ordinarily "invalidates contracts that purport to exempt an individual or entity from liability for future intentional wrongs ... and gross negligence." Frittelli, Inc. v. 350 N. Canon Drive, LP , 202 Cal. App. 4th 35, 43, 135 Cal.Rptr.3d 761 (2011) (citing Farnham v. Superior Court , 60 Cal. App. 4th 69, 74, 70 Cal.Rptr.2d 85 (1997) ; Santa Barbara , 41 Cal. 4th at 777, 62 Cal.Rptr.3d 527, 161 P.3d 1095 ). Section 1668 therefore buttresses the plain language reading of ISA § 18, which carves out only gross negligence and willful misconduct.

Copart relies on P-54 and P-63 to argue that defendants had intended to include "negligence (active or passive)" in the limitation of liability clause, but Copart rejected that language. Although P-54 involves an email from a Sparta employee with a subject line stating "final documents" and a draft ISA attached that has that language, it is not clear at all from the exhibit who proposed that language. And the language stricken out in P-63 in favor of language referring to "gross negligence," the language that appears in the executed ISA, does not indicate who proposed the striking out. The exhibits, even if the court were to admit them, do not shed light on the meaning of the terms in dispute here. Moreover, injecting active negligence or passive negligence into an integrated agreement that mentions only gross negligence would contradict or add to the agreement instead of supplementing it, contrary to the requirements of California Code of Civil Procedure section 1856(a) - (b).

The court therefore finds gross negligence is the only form of negligence excepted from the limitation of liability clause, consistent with the integrated ISA's plain language.

b) Exception for Gross Negligence

Defendants contend a burden-shifting framework applies to limitation of liability clauses such as ISA § 18. ECF No. 518 at 4. In other words, they say, once defendants show the clause applies, the burden shifts to Copart to show an exception to the clause prevents its application. See id.

California courts do apply a burden shifting framework. First, a defendant must establish the clause applies, that the clause is "binding and enforceable" except to the extent "it would protect [defendant] from future liability arising from [its] gross negligence." Eriksson , 233 Cal. App. 4th at 733-34, 183 Cal.Rptr.3d 234. The burden then shifts to a plaintiff to show by a preponderance of the evidence that a defendant "was grossly negligent." Id. at 732, 183 Cal.Rptr.3d 234 ; see also Jimenez v. 24 Hour Fitness USA Inc. , 237 Cal. App. 4th 546, 561, 188 Cal.Rptr.3d 228 (2015) ; Esprit de Corp. v. Victory Exp., Inc. , 1999 WL 9939, at *5 (N.D. Cal. Jan. 5, 1999) (defendant "has the burden of proving that its liability to [plaintiff] is limited under the terms of the ... contract"); see also ECF No. 374 at 75-77 (Sparta's proposed instruction predicating lost profit damages on jury's finding of gross negligence or willful misconduct).

The implicit factual determinations made by the jury here in reaching its verdict appear to preclude a finding of gross negligence in this case. The jury found Sparta did not have unclean hands.

Id. at 8. Nor did Sparta engage "in conduct with malice, oppression, or fraud." Id. at 2, 4. Teutscher v. Woodson , 835 F.3d 936, 944 (9th Cir. 2016) (trial court must "follow the jury's implicit or explicit factual determinations" for "both liability and relief on the equitable claims") (citations omitted). The jury found Copart 20 percent liable for its own professional negligence claim against Sparta. Verdict Form at 4. The jury also found in favor of Sparta on all of Copart's fraud claims except for fraudulent concealment. Id. at 2. Given the highly factual nature of a gross negligence determination, the court may not make such a finding without risking disregard of the "jury's finding of fact." Acosta , 718 F.3d at 828 ; see Jimenez , 237 Cal. App. 4th at 555, 188 Cal.Rptr.3d 228 ("As our high court has noted, whether conduct constitutes gross negligence is generally a question of fact, depending on the nature of the act and the surrounding circumstances shown by the evidence."); Acosta v. Glenfed Dev. Corp. , 128 Cal. App. 4th 1278, 1295, 28 Cal.Rptr.3d 92 (2005) ("[W]hether an action constitutes willful misconduct is a question of fact.") (citation and internal quotation marks omitted). See also May 16 Trial Tr. at 246:13-19 (Copart responding "I know" after court states it does not think it can make a factual determination as to gross negligence).

Copart also has argued this court "should reject [d]efendants' attempt to assert a contract defense that they failed to present to the jury as a basis to overturn the jury's verdict." ECF No. 520 at 5. But this was not what happened at trial. As explained above, the parties agreed to have the court determine the application of ISA § 18.

c) Indirect, Special, or Consequential Damages

Defendants claim the limitation of liability clause precludes Copart from recovering anything but general damages or market damages. ECF No. 503 at 9-11; see Instruction No. 45. According to defendants, the only damages available to Copart for professional negligence under the limitation of liability clause would be "the difference between the result that would have occurred without negligence and the actual result." ECF No. 503 at 15. Because "Copart failed to seek the market-based difference between the SAP system as expected and the value of the SAP system as delivered," Copart has no available damages for professional negligence under ISA § 18. Id. at 15. Although defendants appear to have waived this issue, as explained above, the court analyze the merits of defendants' argument here. See Miller v. Blacketter , 525 F.3d 890, 895 n.6 (9th Cir. 2008) (reviewing district court's decision on merits when district court "expressly stated it would treat the claim as preserved and proceeded to assess the merits" despite observing defendant "may have waived" his right to counsel of choice).

Copart disputes defendants' characterization that "fees paid to the negligent defendant [are] not recoverable because" they are "indirect" or "consequential." ECF No. 520 at 2. Both parties cite Orrick Herrington & Sutcliffe LLP v. Superior Court , 107 Cal. App. 4th 1052, 132 Cal.Rptr.2d 658 (2003), to support their positions.

In Orrick , the California Court of Appeal held the fees a client paid to his attorney could "constitute actual damages" to the extent the client was "claiming he paid more than the value of the legal services he received." Id. at 1060, 132 Cal.Rptr.2d 658. "If he [can] prove he did not receive value for his payment, he may recover damages 'to the extent' the fees exceed[ed] the value of the services received." Id. (citation omitted). The court ruled the client's recovery was "limited to the amount of fees paid." Id. The court also stated it believed "it is evident that an overpayment for services is contract damages," reasoning that "were the law to be otherwise, tort damages would exist in every instance an attorney collected a fee." Id.

The parties also discuss Lewis Jorge Const. Mgmt., Inc. v. Pomona Unified Sch. Dist. , 34 Cal. 4th 960, 968, 22 Cal.Rptr.3d 340, 102 P.3d 257 (2004). In that case, the California Supreme Court distinguished between general damages and special damages as the "two types" of "contractual damages." Id. at 968-69, 22 Cal.Rptr.3d 340, 102 P.3d 257. But as Copart observed, defendants cite no case in which fees a plaintiff paid to the negligent defendant were not recoverable because they were held to be "indirect" or "consequential." Neither Orrick nor Lewis discusses limitation of liability clauses. They address general or special damages only as limited to contract damages. Thus, the authority defendants cite merely shows ISA § 18's preclusion of "any indirect, incidental, special, or consequential damages arising out of or relating to [a party's] performance or failure to perform ... even if advised of the possibility of such damages" applies only to contract damages. Here, the court finds no damages more direct than the fees Copart paid for a product that never launched.

To the extent Copart put forth evidence at trial that the product created by defendants had no value, Copart was showing a difference between the value of the product purchased and how much Copart paid, as outlined in Orrick . See, e.g. , April 26 Trial Tr. at 57:11-58:9, 59:13-60:2, 60:8-15, ECF No. 416 (testimony that Sparta never delivered "lot master lockdown" functionality); id. at 38:4-39:1, 39:2-41:3, 43:8-11, 41:4-43:7, 44:15-45:1 (testimony that Sparta did not deliver multiple functions to track customer credits and payments); id. at 46:19-20, 49:1-14, 51:9-17, 53:1-18, 57:1-8 (no delivery of "call for release" or "gate pass" functions). Testimony at trial indicated Copart abandoned Sparta's system because it was "laden with bugs," "unstable" and poorly documented, making it ultimately unusable for Copart's business. May 1 Trial Tr. at 19:8-20, ECF No. 424; id. at 163:16-164:6; May 3 Trial Tr. at 157:9-11, ECF No. 425. Again, this testimony shows a discrepancy between the value of the system Copart received and the value Copart paid Sparta for the system.

Thus, either because the "indirect, incidental, special, or consequential damages" limitations do not apply to tort claims, or because Copart has shown general damages by showing a difference between the value of the system delivered and the value Copart paid to Sparta, the only portion of the limitation of liability clause applicable to Copart's professional negligence award is therefore ISA § 18(B).

d) Paid or Payable

Copart asserts the phase "actually paid or payable" means the limitation of liability clause accounts for Copart's fees paid to Sparta, $11,364,461, and the jury award to Sparta for $4,880,000 based on Sparta's claim against Copart for breach of the implied covenant of good faith and fair dealing. ECF No. 505 at 38-39. But this interpretation ignores the ISA's use of "payable" throughout the agreement. For instance, Milestone fees "shall be payable" to Sparta only after "Acceptance" and "in accordance" with "the payment schedule in the applicable Statement of Work." ISA § 9.1. The jury's award to Sparta does not conform to that use of "payable." See Instruction No. 40 (requiring a finding that "Copart unfairly interfered with Sparta's rights to receive the benefits of the contract," in order to find for Sparta on its claim against Copart for breach of the implied covenant of good faith and fair dealing). This interpretation respects the requirement that "[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." Cal. Civ. Code § 1641.

Copart's argument also ignores the use of "or" instead of "and." Were Copart limited to "amounts actually paid" and "payable," Copart's position would have more merit.

Copart's damages for its professional negligence claim are therefore limited to the fees it "actually paid" to Sparta for Milestones 1 through 7.

5. Section 18's Application

Copart asserts trial evidence "showed that Copart 'actually paid' at least $11,364,461 in fees to Sparta." ECF No. 520 at 2 n.3 (citing ECF No. 38-39; P-1076). "Another $13 million was 'payable' on the remaining Milestones of the Build Phase of the contract, ... resulting in a 'cap' of $24 million under [ISA § 18(B) ]." Id. (citing JX-3 at 33, JX-4 at 5). Alternatively, it argues, if this court rules ISA § 18(B)(Y)'s language of "AMOUNTS ... PAYABLE" was limited "to the jury's award of $4.88 million, the 'cap' under [ISA § 18(B) ] is at least $16,244, 461." Id. Copart also argues its "fees paid to Sparta, fees paid to other vendors, and internal Copart spending-amounted to over $23 million." ECF No. 505 at 35. Thus, "as a matter of mathematics, [ISA § 18] would not reduce the jury award even if it were applicable (which it is not)." ECF No. 516 at 5.

Defendants assert Copart is limited to general or market damages, which Copart did not show. In response, Copart asserts "the jury received evidence of direct damages-including fees Copart paid to Sparta and third parties that were expressly contemplated by the contract-that exceed $23 million and fall outside the restriction of [ISA § 18(A) ]." ECF No. 520 at 2 (citing ECF Nos. 505 at 33-36, 516 at 5-6). The court has already rejected defendants' argument above as waived or alternatively, if not waived, has rejected it on the merits.

Sparta's liability to Copart for the professional negligence claim would be $11,364,461, or $16,244,461 if the damages owed to Sparta for its contract-related claim were a fee "payable by Copart to [Sparta]" and the "amounts actually paid or payable" is not properly read as a disjunctive "or" phrase. ISA § 18(B)(X)-(Y) (limiting damages to "$5,000,000 or" ... amounts actually paid or payable ...."). Because Copart's successful fraud-concealment claim involves "willful misconduct" and is not limited by § 18, the professional negligence claim award is limited to the fees Copart paid, or Copart's fees payable, to Sparta. As discussed above, the jury award of $4,880,000 is not properly calculated as part of the liability limit because it does not qualify as "payable" and ISA § 18 permits Copart to recover for the amount "actually paid" or "payable."

Defendants contend the 20 percent comparative fault of Copart, as found by the jury, applies after determining the cap on Copart's professional negligence damages. ECF No. 503 at 20 (citing Luttrell v. Island Pac. Supermarkets, Inc. , 215 Cal. App. 4th 196, 208, 155 Cal.Rptr.3d 273 (2013) (applying failure to mitigate reduction after applying doctrine limiting damages to "amount actually paid" for medical expenses because otherwise plaintiff's "failure to mitigate would have had no consequence whatsoever" and because "tortfeasor should be held to pay the full cost of its negligence or wrongdoing-no more and no less"). In response, Copart cites Cohen v. Kite Hill Community Ass'n , 142 Cal. App. 3d 642, 654, 191 Cal.Rptr. 209 (1983) for the general proposition that courts construe limited liability clauses narrowly. But the court has already construed ISA § 18 above. And as noted the court cannot "disregard a jury's finding of fact." Acosta , 718 F.3d at 828. Here, that finding is that Copart bears 20 percent of the responsibility for the damages found on its professional negligence claim against Sparta.

Copart also refers to the court's refusal "to admit certain evidence of additional payments by Copart to Sparta, which Copart sought to admit under Rule 801(d)(2) of the Federal Rules of Evidence." ECF No. 505 at 29 n.15. The court however will not now consider evidence the court "refused to admit ... under Rule 801(d)(2)," including as an example D-1011. See ECF No. 505 at 38 n.5. Because the jury considered "[p]ayments to Sparta for Milestones 1 through 7," Instruction No. 45, the amount of money Sparta received from Copart for allegedly deficient work was before the jury. The court will not "disregard a jury's finding of fact" as to what Sparta owes Copart based on what Copart paid to Sparta. Acosta , 718 F.3d at 828 ; P-1076 (admitted exhibit showing Copart paid Sparta $11,364,460.88 in fees).

Deducting Copart's 20 percentage of responsibility from the fees Copart paid to Sparta results in Copart's professional negligence award being capped by ISA § 18 at $9,091,568.70.

C. Restitution: Unjust Enrichment and Unfair Competition Law (UCL)

Copart asserts Sparta owes restitution to Copart of $11,364,461 in the amount of fees it paid to Sparta during the project, based on Copart's unjust enrichment or unfair competition law (UCL) claims. ECF No. 505 at 10, 24-29. Defendants contend Copart is not entitled to restitution under unjust enrichment or the UCL. ECF No. 503 at 29-40. Additionally, defendants argue an award of restitution under the UCL would effect an impermissible double recovery. Id. at 38-39, 135 Cal.Rptr.3d 761. As explained below, the court determines Copart is not entitled to an unjust enrichment award, but Copart is entitled to $6,332,350.77 as an alternative remedy to Copart's damages award, which does not alter the jury verdict at this time.

1. Unjust Enrichment

Copart argues Sparta is liable "for common law unjust enrichment." ECF No. 505 at 10, asserting "[a] plaintiff can seek restitution in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason." Id. at 29. Defendants assert unjust enrichment is unavailable "because, as Copart concedes, there is a valid, enforceable contract governing the relationship between Copart and Sparta." ECF No. 503 at 21.

"When a plaintiff alleges unjust enrichment, a court may 'construe the cause of action as a quasi-contract claim seeking restitution.' " Astiana v. Hain Celestial Grp., Inc. , 783 F.3d 753, 762 (9th Cir. 2015) (quoting Rutherford Holdings, LLC v. Plaza Del Rey , 223 Cal. App. 4th 221, 231, 166 Cal.Rptr.3d 864 (2014) ). But a plaintiff may not "pursue or recover on a quasi-contract claim if the parties have an enforceable agreement [on] a particular subject matter." Klein v. Chevron U.S.A., Inc. , 202 Cal. App. 4th 1342, 1388, 137 Cal.Rptr.3d 293 (2012) ; see Cont'l Cas. Co. v. Enodis Corp. , 417 F. App'x 668, 670 (9th Cir. 2011) ("Under California law, unjust enrichment is an action in quasi-contract and is not cognizable when there is a valid and enforceable contract between the parties."). As this court has recognized previously in dismissing a claim for unjust enrichment, "to state a quasi-contract claim for restitution or unjust enrichment, [counterdefendant] must plausibly allege the absence of any applicable and enforceable contract provisions, even if in the alternative." Lennar Mare Island, LLC v. Steadfast Ins. Co. , No. 2:12-CV-02182-KJM-KJN, 2016 WL 829210, at *4 (E.D. Cal. Mar. 3, 2016).

This court's rulings and the party's representations to the court have all been based on assertions of an enforceable contract. For example, the court dismissed Sparta's unjust enrichment claim at summary judgment, finding "Sparta cannot show Sparta's claims are outside the [c]ontract's scope." ECF No. 264 at 17. Sparta's equitable claims sought "compensation for the reasonable value of, or benefit conferred by, Sparta's work under the [c]ontract." Id. Copart has represented multiple times in this litigation that the agreements in this case "are valid, enforceable contracts." Third Am. Compl. (TAC) ¶¶ 146, 152, ECF No. 126. During argument on defendants' motion to bifurcate trial, defendants acknowledged "one element of prejudice is undercut" because "Copart flat[-]out says it intends not to seek [rescission] but, rather, to hold defendants to the terms of the contract and seek damages, and the [c]ourt would consider Copart bound at this point by that statement ...." February 9, 2018 Hr'g Tr. at 6:6-14. When the court asked Copart if it could "hold [Copart] to that," Copart responded, "Yes, your Honor." Id. at 6:15-16. The court then stated "Copart is held to that regardless of whatever else I may say." Id. at 6:17-18; see ECF No. 390 at 5-6 (court order denying defendants' motion for bifurcation); ECF No. 341 at 10 (Copart opposition to defendant's motion to bifurcate).

The jury verdict affirms the contract between Copart and Sparta, precluding unjust enrichment under a quasi-contract claim. The jury found Copart had breached the implied covenant of good faith and fair dealing. See Verdict Form at 8. To reach that finding, the jury first had to find, in relevant part, that "Sparta and Copart entered into a contract;" "Sparta did all, or substantially all of the significant things that the contract required it to do or that it was excused from having to do those things;" and "All conditions required for Copart's performance had occurred or were excused ...." Instruction No. 40. The jury had to reject Copart's affirmative defenses of unclean hands and waiver, at least to some extent, to award any damages to Sparta. See id. ; Verdict Form at 8.

Because the jury found an enforceable contract, Copart may not recover under unjust enrichment. To rule otherwise would violate the Seventh Amendment. See Acosta , 718 F.3d at 828 ; see also Fraley v. Facebook, Inc. , 830 F.Supp.2d 785, 814-15 (N.D. Cal. 2011) (granting defendant's motion to dismiss plaintiffs' unjust enrichment claim with prejudice while denying defendant's motion to dismiss plaintiffs' UCL claim under any prong because "unjust enrichment is not an independent cause of action under California law").

2. New Evidence: UCL Claims

With respect to the unfair and fraudulent prongs of the UCL, "[t]o the extent the Court believes the evidence presented to the jury was insufficient, Copart requests an opportunity to present additional trial exhibits and testimony to the Court." ECF No. 505 at 25 n.3. Defendants insist Copart cannot establish UCL liability. ECF No. 521 at 5-6. And "if the court held "an evidentiary bench trial ... over [d]efendants' objection, [d]efendants would contest Copart's causation and other evidence." Id. at 5 n.9 (citing ECF No. 522).

The court does not need to admit any new evidence on these claims. The jury's findings and Copart's UCL claims "involve common issues" such that the court must "follow the jury's implicit or explicit factual determinations." Granite State , 76 F.3d at 1027 ; L.A. Police Protective League , 995 F.2d at 1473.

3. UCL Standing

Defendants assert Copart lacks standing to assert a UCL claim. ECF No. 503 at 27-29. Copart disagrees. See ECF No. 505 at 24-25 & n.2. The court finds Copart has standing.

To have standing under the UCL, a plaintiff must have "suffered injury in fact" and "lost money or property as a result of the unfair competition." Cal. Bus. & Prof. Code § 17204. As the California Supreme Court has held, a plaintiff must "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." Kwikset Corp. v. Superior Court , 51 Cal. 4th 310, 322, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011) (emphasis removed). At least one court has found that standing for a fraudulent prong UCL claim requires the plaintiff to prove actual reliance. Goonewardene v. ADP, LLC , 5 Cal. App. 5th 154, 184-87, 209 Cal.Rptr.3d 722 (2016), as modified on denial of reh'g (Nov. 29, 2016) (rejecting plaintiff's a