225 F.3d 662 (9th Cir. 2000), 97-56386, Galaxy Networks, Inc. v. Kenan Systems Corp.

Docket Nº:97-56386, 97-56435
Citation:225 F.3d 662
Party Name:GALAXY NETWORKS, INC., a California Corporation, Plaintiff-Appellee-Cross-Appellant, v. KENAN SYSTEMS CORPORATION, d/b/a Technologies, Defendant-Appellant-Cross-Appellee. D.C. No. CV-98-05568-DDP.
Case Date:June 02, 2000
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 662

225 F.3d 662 (9th Cir. 2000)

GALAXY NETWORKS, INC., a California Corporation, Plaintiff-Appellee-Cross-Appellant,

v.

KENAN SYSTEMS CORPORATION, d/b/a Technologies, Defendant-Appellant-Cross-Appellee.

D.C. No. CV-98-05568-DDP.

Nos. 97-56386, 97-56435

United States Court of Appeals, Ninth Circuit

June 2, 2000

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)

Argued and Submitted May 5, 1999.

As Amended on Denial of Rehearing en banc Aug.9, 2000.

Appeal from the United States District Court for the Central District of California, Dean D. Pregerson, District Judge, Presiding.

Before BRUNETTI, WARDLAW, Circuit Judges, and SEDWICK, 2 District Judge.

MEMORANDUM 1

Kenan Systems Corporation ("Kenan Systems") appeals the district court's denial of its renewed motion for judgment as a matter of law following a jury verdict awarding $1,292,000 to Galaxy Networks, Inc. ("Galaxy") in quantum meruit. Kenan Systems also argues that the judgment should be reversed because: (1) Galaxy presented improper evidence that tainted the jury's verdict; (2) the evidence was insufficient to support the jury's award; and (3) the award was excessive. Galaxy cross-appeals the district court's grant of summary judgment in favor of Kenan Systems on Galaxy's breach of contract and interference with prospective business advantage claims.

We review a grant of summary judgment de novo. See Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.1998). We also review de novo the district court's denial of a motion for judgment as a matter of law. See Huffman v. County of Los Angeles, 147 F.3d 1054, 1057 (9th Cir.1998), cert. denied, 526 U.S. 1038, 119 S.Ct. 1333, 143 L.Ed.2d 498 (1999). "Judgment as a matter of law is proper if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's ." Scott v. Ross, 140 F.3d 1275, 1281 (9th Cir.1998), cert. denied, Cult Awareness Network v. Scott, 526 U.S. 1033, 119 S.Ct. 1285, 143 L.Ed.2d 378 (1999). "We review evidentiary decisions for abuse of discretion and will not reverse absent some prejudice." Pau v. Yosemite Park & Curry Co., 928 F.2d 880, 887 (9th Cir.1991). Kisor v. Johns-Manville Corp., 783 F.2d 1337, 1340 (9th Cir.1986).

We have jurisdiction under 28 U.S.C. § 1291. We hold that the district court correctly granted summary judgment in favor of Kenan Systems on Galaxy's breach of contract and interference with prospective business advantage claims, that it correctly denied Kenan Systems' motion for judgment as a matter of law on Galaxy's quantum meruit claim, and find sufficient evidence to support the jury's verdict. We therefore affirm.

The parties are familiar with the facts and prior proceedings. Thus, we need not recite them here except as necessary to explain the disposition.

I.

Galaxy's Appeals

A.

The district court granted summary judgment in favor of Kenan Systems on Galaxy's breach of contract claims, finding that the parties had not entered a valid contract because they had not agreed on all of its essential terms. On appeal Galaxy argues it had entered into a valid services contract with Kenan Systems under which: (1) Galaxy had the exclusive right to represent Kenan Systems with regard to the Time Telecommunications Sdn Bhd ("Time Telekom") account for six months, which was later extended; (2) Kenan Systems would not deal directly with Time Telekom; (3) Kenan Systems would receive a $2,500,000 license fee upon the licensing of its software product, Arbor/BP, to Time Telekom; and (4) Galaxy could mark-up the license fee as it saw fit.

Even assuming the June 24, 1994, meeting at Kenan Systems' offices culminated in Galaxy and Kenan Systems orally agreeing to the contractual terms alleged by Galaxy, the undisputed evidence demonstrates that although Galaxy and Kenan Systems contemplated a legally enforceable agreement, and had mutually assented to some of its terms, the parties had not yet agreed on all of the essential terms. See Hotel Del Coronado Corp. v. Foodservice Equip. Distribs. Ass'n, 783 F.2d 1323, 1325 (9th Cir.1986) ("[I]f an essential element of a promise is reserved for future agreement by both parties there is no legal obligation until such future agreement is made.").

As early as August 3, 1994, Kenan Systems faxed Galaxy a three-page "Non Disclosure Agreement" and a thirteen-page "Proposal Generation Agreement Between Kenan Systems Corporation and Galaxy Networks, Inc." The fax cover letter stated that the documents "must be reviewed and signed prior to continued work" on the Time Telekom account. One week later on August 10, 1994, Galaxy faxed a response recommending that the parties "change the 'Proposal Generation Agreement' into a complete contract to cover both the sales of Arbor and the engineering fee associated with all of the efforts behind it (i.e. proposals, customization and etc.)."

Without coming to terms on a Proposal Generation Agreement, Galaxy's founder and president, Oliver Song, faxed Kenan Systems on August 15, 1994, requesting that Kenan Systems "kindly write a letter ... to state that Galaxy Networks has been appointed the 'exclusive representative' for Kenan Systems in the Time Telekom project." Although Kenan Systems faxed the requested letter to Galaxy on August 18, 1994, including a similar letter addressed to Time Telekom, the parties had not yet settled on the "Proposal Generation Agreement" and in particular whether to change the agreement into a "complete contract to cover both the sales of Arbor and the engineering fee." The parties' failure to agree on the final terms is further reflected by their subsequent correspondences, in which Galaxy stated, among other things: "we really need to have the terms defined before making the commitment;" and "I need to know where we stand."

We conclude, as a matter of California law, that Kenan Systems was not contractually bound to refrain from selling Arbor/BP directly to Time Telekom. Accordingly, we affirm the district court's grant of summary judgment in favor of Kenan Systems' on Galaxy's breach of oral and written contract claims and its breach of the implied covenant of good faith and...

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