Filed 3/18/20 Brighton Collectibles v. AIF Corp. CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

BRIGHTON COLLECTIBLES, LLC,

Plaintiff and Appellant,

v.

AIF CORPORATION,

Defendant and Respondent.

B289327

(Los Angeles County

Super. Ct. No. BC526920)

APPEAL from a judgment and order of the Superior Court of Los Angeles County. Monica Bachner, Judge. Affirmed.

Browne George Ross, Peter W. Ross and Keith J. Wesley for Plaintiff and Appellant.

The David Firm, Henry S. David and Hayim M. Gamzo for Defendant and Respondent.

_____________________________

Brighton Collectibles, LLC (Brighton) brought this action against AIF Corporation (AIF), asserting a claim for breach of the implied warranty against infringement. A jury found AIF liable, but concluded it was responsible for only 7.89 percent of the total damages, which were $1.267 million. On appeal, Brighton contends AIF failed to present evidence of a logical method to apportion the damages, and the jury should have been required to decide whether the damages were divisible before apportioning them. Brighton also contends the trial court erred in denying its motion for attorney fees. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The Federal Action

Brighton designs, manufactures, distributes, and sells women’s fashion accessories. In 2010, it sued Texas Leather Mfg., Inc. (Texas Leather) and its principal, Richard Ohr, in federal court, claiming they infringed its copyrights by selling knockoffs of authentic Brighton handbags, wallets, and watches. AIF supplied the watches to Texas Leather, and Texas Leather obtained the handbags and wallets from five other suppliers. Brighton named AIF and the other suppliers as defendants in the federal action as well. The claims against AIF concerned products in addition to those it supplied to Texas Leather.

Texas Leather eventually entered into a settlement agreement with Brighton. In order to resolve the claims against it, Texas Leather paid Brighton $1 million and assigned it any claims it had against its suppliers, including AIF. Texas Leather incurred $267,000 in attorney fees and costs in connection with the federal action.

Brighton also reached settlements with the non-AIF suppliers for a total of $2.4 million, which resolved the federal action claims as well as the claims Texas Leather assigned to Brighton. Brighton proceeded to trial solely against AIF and obtained a $1 million judgment in its favor. The judgment, however, did not reflect liability for the specific products AIF sold to Texas Leather.

The Superior Court Complaint

Brighton exercised its rights obtained in the Texas Leather settlement by filing an action in Superior Court against AIF, standing in the shoes of Texas Leather. In the operative first amended complaint, Brighton asserted a claim for breach of the implied warranty against infringement. To prevail on that claim, Brighton had to show AIF supplied Texas Leather products that exposed Texas Leather to a rightful claim of infringement made by a third party.

Trial

At the jury trial, Brighton called as a witness Dan MacLemore, who was Texas Leather’s attorney in the federal action. MacLemore explained there are three methods of calculating damages in a copyright infringement case: actual damages, disgorgement of profits, and statutory damages. When evaluating whether to settle the case, MacLemore considered the potential risks to Texas Leather of going to trial based on each category of damages.

McLemore explained that statutory damages in a copyright infringement case range from $750 to $150,000 per copyright infringed, depending on the circumstances. (See 17 U.S.C. § 504(c)(1).) According to MacLemore, 17 total copyrights were at issue in the federal action, and AIF was alleged to have infringed 14 of them.

MacLemore also testified to various financial figures that could be used to calculate damages based on Texas Leather’s profits. According to MacLemore, Texas Leather’s gross profits from sales of all the products at issue in the federal action were $2.1 million, of which $4,923 were attributable to the watches supplied by AIF. Its net profits from sales of the watches were $2,735, compared to around $150,000 of net profits from sales of all the products at issue.

On cross examination, MacLemore testified that AIF supplied to Texas Leather approximately 5 to 10 percent of the total number of products at issue in the federal action. He was then asked whether he made “the assessment that, if indeed there was even liability at all on AIF[,] that that 5 or 10 percent . . . of that [million dollar settlement] would have been AIF’s responsibility?” MacLemore indicated he had made that assessment.

AIF presented expert testimony from David Drews, who worked for a consulting firm and had published extensively on the calculation of damages in intellectual property cases. Drews opined that AIF was responsible for 0.2 percent of Texas Leather’s total damages, which equaled the proportion of Texas Leather’s sales attributable to AIF’s watches. Drews explained if one instead used AIF’s proportionate share of net profits, its liability for the total damages would be around two percent.

In their closing arguments, the parties presented wildly different estimates of AIF’s proportionate share of Texas Leather’s damages. AIF urged the jury to adopt its expert’s calculations based on its proportionate share of total sales of infringing products, under which it would be responsible for no more than 0.2 percent of the total damages. Brighton, in turn, argued AIF was responsible, at a minimum, for its proportionate share of the total possible statutory damages plus net profits, which it calculated to be approximately 78 percent. It argued this would apportion the damages among the different suppliers in a “fair way” that “reflects the damages that they exposed Texas Leather to.”

In a special verdict, the jury found AIF supplied watches that exposed Texas Leather to a rightful claim of copyright infringement in the federal action. The jury concluded Texas Leather’s total damages were $1.267 million, multiple suppliers were at fault and their fault was a substantial factor in causing the harm, and AIF was responsible for 7.89 percent of the harm. Based on these findings, the court entered judgment in favor of Brighton for $99,966.30, which is 7.89 percent of $1.267 million.

Post-Trial Motions

Brighton filed a motion for judgment notwithstanding the verdict, asserting several errors related to the apportionment of damages. Brighton argued it was entitled to a judgment of $1.267 million because its damages were indivisible as a matter of “logic and experience,” AIF failed to establish a logical basis for apportionment, and it was not proper to equitably divide the damages since multiple suppliers could be responsible for the same damages. Brighton additionally argued the jury was improperly instructed to assume damages were divisible and should have been asked to decide that issue before apportioning the damages.

The court denied the motion. It rejected Brighton’s argument that the damages were indivisible, explaining this was not a case of joint and several liability. The court noted the various suppliers sold different products to Texas Leather at different times, and none of the suppliers were part of the supply chain between AIF and Texas Leather. It further noted Brighton had previously argued none of the suppliers were jointly liable for the sale of AIF’s infringing watches or the harm AIF caused Texas Leather.

The court next found AIF met its burden of showing the damages could be apportioned. It pointed to evidence showing AIF’s proportion of sales, profits, products, infringed copyrights, and claims at issue in the federal action. It also pointed to Drew’s expert testimony that AIF was responsible for its proportionate share of sales or profits, and MacLemore’s testimony that AIF was responsible for 5 to 10 percent of the settlement.

Finally, the court found the jury was not instructed to assume damages were divisible. Instead, it was instructed to assign a percentage of liability to AIF only if it found other suppliers were liable for Texas Leather’s harm and a substantial factor in causing that harm.

Brighton subsequently moved for an award of attorney fees, which the trial court denied. We discuss the motion and order in more detail below.

Brighton timely appealed the judgment and denial of its motion for attorney fees. We consolidated the appeals at the parties’ request.

DISCUSSION

I. The Evidence Supports Reasonable and Logical Methods for Apportioning Damages

Brighton contends the trial court should have granted its motion for judgment notwithstanding the verdict (JNOV) because there is insufficient evidence from which the jury could reasonably and logically apportion the damages. We disagree.

A trial court may grant a JNOV motion only if there is no substantial evidence to support the verdict, viewing the evidence in the light most favorable to the party securing the verdict. (Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 770.) We apply the same standard of review on appeal, asking whether there is any evidence—contradicted or uncontradicted—to support the jury’s conclusion. (Ibid.) In doing so, we resolve all conflicts in the evidence and draw all reasonable inferences in favor of the verdict. (Hartt v. County of Los Angeles (2011) 197 Cal.App.4th 1391, 1402.)

Under the principles of joint and several liability, where multiple tortfeasors have caused the plaintiff to suffer indivisible damages, each tortfeasor is jointly and severally liable for all the damages. (People v. ConAgra Grocery Products Co. (2017) 17 Cal.App.5th 51, 117; see State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1033.) Whether damages are divisible rests on causation, not the type or nature of the damages. (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 273; Turcon Construction, Inc. v. Norton-Villiers, Ltd. (1983) 139 Cal.App.3d 280, 284.)

According to the Restatement Third of Torts, damages are divisible if the evidence provides a reasonable basis for the factfinder to determine: “(1) that any legally culpable conduct of a party . . . was a legal cause of less than the entire damages for which the plaintiff seeks recovery and (2) the amount of damages separately caused by that conduct.” (Rest.3d, Torts, Apportionment Liab. § 26.) The party alleging damages are divisible has the burden of proof on the issue. (Id., comm. h.)

Here, Brighton essentially challenges the sufficiency of the evidence to support the second prong of the Restatement test. It contends AIF’s suggested method of apportionment—which focused on AIF’s relative responsibility for Texas Leather’s overall liability in the federal action—did not provide a logical or reasonable basis for the jury to apportion the damages.

With respect to the $1 million settlement payment in particular, Brighton asserts the apportionment method improperly ignored the role played in settlement by factors other than actual damages, such as the costs to continue litigating the case. Because responsibility for such costs could overlap between the various suppliers, Brighton contends, AIF’s pro-rata apportionment method was illogical, at least in the absence of evidence showing precisely how the $1 million figure was derived.

In making this argument, Brighton simply ignores MacLemore’s testimony that AIF was responsible for 5 to 10 percent of the settlement payment, which corresponded to its share of the products at issue in the federal action. This testimony alone provided sufficient evidence from which the jury could reasonably apportion the settlement damages. MacLemore, after all, represented Texas Leather in the federal action and had first-hand knowledge of how it arrived at the settlement figure. Not surprisingly, the jury’s verdict was consistent with it.

MacLemore’s testimony also contradicts Brighton’s claim that the settlement represented costs for which the various suppliers shared overlapping responsibility. MacLemore explained that, when evaluating whether to settle the federal action, he considered the risks to Texas Leather of going to trial. Those risks consisted of the various forms of damages available in a copyright infringement case. MacLemore did not mention the continuing costs of litigation or other costs that would necessarily overlap between the suppliers. In the absence of such testimony, Brighton’s insistence that the settlement represented overlapping costs is mere speculation.

Brighton makes a similar, and equally meritless, argument regarding the apportionment of Texas Leather’s attorney fees. According to Brighton, AIF’s pro-rata apportionment method was illogical and “bore no relation to reality” because it wrongly assumed the attorney fees paid for each task were attributable to the actions of only one supplier. Courts, however, frequently make such an assumption when they apportion attorney fees among multiple defendants based on each defendant’s relative culpability, which is essentially what AIF was advocating for here. (See Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 97–98 [“California law has recognized . . . that trial courts have discretion not only in setting the amount of an award of attorney fees, but in allocating the award among various defendants based on their relative culpability.”]; Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 250 [directing the trial court to apportion attorney fees between multiple defendants based on the relief obtained against each]; Torres-Rivera v. O’Neill-Cancel (1st Cir. 2008) 524 F.3d 331, 337 [noting one method to divide attorney fees among multiple defendants is by their relative liability for the underlying claims]; Jose P. v. Ambach (2d Cir. 1982) 669 F.2d 865, 871 [the trial judge’s “decision to apportion [attorney] fees according to relative culpability was within his discretion”].) We presume those courts are acting reasonably and logically when apportioning attorney fees in such a manner. Accordingly, we reject Brighton’s contention that an apportionment of Texas Leather’s attorney fees based on AIF’s relative culpability is inherently flawed.

We also reject any implicit argument that the evidence is insufficient to support the use of such a method in this case. As discussed above, MacLemore testified AIF was responsible for 5 to 10 percent of the $1 million settlement. The jury could have reasonably inferred AIF’s overall relative culpability for the federal action was the same. Alternatively, because one measure of damages in copyright infringement cases is the profits attributable to the infringing works, the jury could have determined AIF’s overall relative culpability from MacLemore’s testimony regarding the profits derived from products sold by each supplier to Texas Leather. The jury, in turn, could have reasonably used AIF’s overall relative culpability to determine its liability for Texas Leather’s attorney fees. (See Gorman v. Tassajara Development Corp., supra, 178 Cal.App.4th at pp. 97–98.)

II. Brighton Has Not Shown Reversible Error Related to the Jury Instructions and Verdict Form

Brighton contends the trial court should have required the jury decide whether Texas Leather’s damages were capable of division before apportioning them. It also contends the jury was improperly precluded from finding AIF’s and the other supplier’s relative faults for the damages totaled more than 100 percent. The claims are forfeited and also lack merit.

A. Background
B.
During a discussion of jury instructions, the trial court indicated it was inclined to instruct the jury with CACI No. 406. The instruction tells the jury that if it finds the fault of more than one person was a substantial factor in causing the plaintiff’s harm, it must assign percentages of responsibility to each person, totaling 100 percent.

Brighton objected to the instruction on the basis that it concerned the apportionment of fault between a plaintiff and defendants, whereas this case involved an apportionment between a defendant and nonparties. Brighton proposed the proper question to the jury should be “what has AIF proven to be its share of the fault. Its share of the damages caused by its conduct, if not a hundred percent.” The court rejected Brighton’s argument, noting the directions accompanying CACI No. 406 expressly state it may be used to apportion fault among a defendant and nonparties.

The court subsequently indicated it would provide the jury a verdict form with four questions on the apportionment issue: (1) what are Texas Leather’s total damages; (2) were one or more suppliers of Texas Leather at fault; (3) if so, was the fault of the other suppliers a substantial factor in causing harm to Texas Leather; and (4) what percentage of responsibility for Texas Leather’s harm do you assign to AIF and the other suppliers, respectively. The sum of the suppliers’ responsibilities had to equal 100 percent.

Brighton objected to the jury being asked any questions about apportionment because apportionment is “not part of the case.” It told the court it was otherwise satisfied with the special verdict form, and it did not request any other changes. The court overruled the objection. It instructed the jury with CACI No. 406 and directed it to complete a special verdict form that included the four questions described above.

C. Discussion
D.
Brighton first contends the trial court should have required the jury determine whether Texas Leather’s damages were reasonably capable of division before proceeding to apportion those damages. Brighton does not specify whether it is challenging the jury instructions, the verdict form, or both. In any case, we agree with AIF that Brighton forfeited the issue by failing to timely raise it below.

Where, as here, “ ‘the court gives an instruction correct in law, but the party complains that it is too general, lacks clarity, or is incomplete, he must request the additional or qualifying instruction in order to have the error reviewed.’ ” (Conservatorship of Gregory (2000) 80 Cal.App.4th 514, 520, italics in original.) Failure to do so forfeits the issue on appeal. (Ibid.) Similarly, a party forfeits any objection to a special verdict form by failing to object before the court discharges the jury. (Taylor v. Nabors Drilling USA, LP (2014) 222 Cal.App.4th 1228, 1242; Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 131; see Keener v. Jeld-Wen, Inc. (2009) 46 Cal.4th 247, 263–264 [failure to object to a verdict before the jury is discharged generally precludes a party from questioning the validity of the verdict].) “The requirement of an objection is premised upon the idea that a party should not sit on his or her hands, but instead must speak up and provide the court with an opportunity to address the alleged error at a time when it might be fixed.” (Keener v. Jeld-Wen, Inc., supra, 46 Cal.4th at p. 266.)

Brighton insists it preserved its claim by repeatedly arguing in the trial court that apportionment was impossible and unwarranted. But those objections did not concern the issue Brighton raises now, which is whether the jury should have been specifically directed to decide if the damages were divisible before apportioning them. Brighton never requested an instruction on that issue; nor did it request the court include an additional question on the verdict form. Instead, it first raised the issue in connection with its proposed judgment, which was well after the jury had been discharged. By that time, there was no way to fix the alleged error, short of a new trial. Brighton’s failure to raise the issue in a timely matter forfeited it on appeal.

Even if we overlooked the forfeiture, we would reject Brighton’s claim on the merits. Brighton maintains a court must put the divisibility question to the jury if reasonable jurors might answer it differently. The only support Brighton provides for this assertion is a Montana case, Azure v. Billings (1979) 182 Mont. 234. We assume, purely for the sake of argument, it is consistent with California law. Brighton insists reasonable jurors could have disagreed in this case for the same reasons it argued AIF’s proposed apportionment method was illogical—essentially, that some of the damages potentially overlapped between the suppliers.

Brighton, however, points to no evidence in the trial record showing the damages were overlapping, nor did it argue that point to the jury. When Brighton did address the apportionment issue in its closing argument, it simply urged the jury to divide the damages according to its preferred method, which strongly implied the damages were capable of reasonable division. On this record, we are not convinced reasonable jurors could disagree about whether the damages were divisible. Accordingly, Brighton has not shown the trial court was required to direct the jury to decide the divisibility issue before apportioning the damages. (See Multani v. Witkin & Neal (2013) 215 Cal.App.4th 1428, 1457 [“ ‘it is appellant’s burden to affirmatively show error’ ”].) For the same reason, even if the court should have put the question to the jury, the error was harmless and does not warrant reversal. (See Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 574 [a judgment will not be reversed “unless there is a reasonable probability that in the absence of the error, a result more favorable to the appealing party would have been reached”].)

We also reject Brighton’s argument, made in passing, that by requiring the sum of the suppliers’ fault equal 100 percent, the court improperly precluded the jurors from finding the suppliers had overlapping fault for certain damages. Once again, Brighton forfeited the issue by failing to timely raise it below. (See Taylor v. Nabors Drilling USA, LP, supra, 222 Cal.App.4th at p. 1242.) In any event, Brighton fails to point to any evidence in the trial record to support a finding that the suppliers had overlapping fault for certain damages. As a result, even if there were error, Brighton has not shown it warrants reversal. (See Soule v. General Motors Corp., supra, 8 Cal.4th at p. 574.)

III. The Trial Court Did Not Err in Denying Brighton’s Motion for Attorney Fees

Brighton contends the trial court erred in refusing to award it attorney fees pursuant to Texas law. We disagree.

A. Background
B.
In its motion for attorney fees, Brighton urged the court to apply Texas law, which allows a successful plaintiff to recover attorney fees incurred in connection with a contract claim. It further argued its breach of implied warranty claim would be considered a contract claim under Texas law. Brighton acknowledged that under California law it would not be entitled to attorney fees, regardless of whether its claim sounded in tort or contract.

The trial court denied the motion. It explained Brighton’s insistence that its claim sounded in contract was inconsistent with its prior representations to the court. Specifically, before trial, AIF moved for summary judgment on the basis that Texas Leather suffered no damages in the federal action because its settlement and attorney fees were paid by its insurance carrier. In opposition, Brighton urged the court to apply the collateral source rule. It acknowledged that some California courts have refused to do so in breach of contract cases, but argued such authority was irrelevant because “there is no contract claim here.” Instead, Brighton argued, its breach of warranty claim sounded in tort. The court agreed with Brighton and denied the motion for summary judgment on that basis.

Given these prior representations, the trial court refused to construe Brighton’s claim as sounding in contract for purposes of awarding attorney fees. It then noted Brighton provided no authority showing Texas law, unlike California law, would permit recovery of attorney fees on a tort claim. The choice of law, therefore, was irrelevant. Alternatively, the court concluded California law was controlling because California has the greater interest in applying its laws to the dispute.

C. Analysis
D.
Brighton contends the trial court erroneously failed to recognize its implied warranty claim would be considered a contract claim under Texas law, thereby entitling it to an award of attorney fees. Although not stated explicitly, the trial court’s refusal to make such a finding turned on its application of judicial estoppel, which we review for an abuse of discretion. (Miller v. Bank of America, N.A. (2013) 213 Cal.App.4th 1, 10.)

Judicial estoppel is an equitable doctrine intended to prevent parties from playing fast and loose with the courts. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181.) Its goals are to maintain the integrity of the judicial system and to protect parties from opponents’ unfair strategies. (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986.) It applies when “ ‘(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’ ” (Id. at pp. 986–987.)

All the requirements for judicial estoppel are present here. In its opposition to AIF’s motion for summary judgment, Brighton argued the collateral source rule applied because its claim sounded in tort, not contract. Brighton was successful in asserting that position; the trial court found its claim sounded in tort and denied AIF’s motion for summary judgment on that basis. Subsequently, Brighton argued it was entitled to attorney fees because its claim sounded in contract, not tort. That position was totally inconsistent with its earlier position, and Brighton does not contend it took the first position as a result of ignorance, fraud, or mistake. The trial court did not abuse its discretion in applying judicial estoppel under these circumstances.

Relying on Howard Indus. v. Crown Cork & Seal Co., LLC, (Tex. App. 2013) 403 S.W.3d 347 (Howard) and JCW Electronics, Inc. v. Garza (Tex. 2008) 257 S.W.3d 701 (JCW Electronics), Brighton suggests its positions were not inconsistent because, under Texas law, an implied warranty claim “could be thought of as tort-like” for purposes of a collateral source rule analysis. While that may be true, neither Howard nor JCW Electronics shows Brighton’s particular claim would be thought of as tort-like for such purposes. In fact, they suggest the opposite.

In Howard, a Texas Court of Appeal concluded, for purposes of awarding attorney fees, a breach of implied warranty claim sounded in contract because the plaintiff sought only economic damages. (Howard, supra, 403 S.W.3d at p. 352.) In reaching that decision, the court relied on JCW Electronics, in which the Supreme Court of Texas set forth the general rule for determining whether an implied warranty claim sounds in contract or tort. The state’s high court explained, “[t]he precise nature of [an implied warranty] claim is ordinarily identified by examining the damages alleged: when the damages are purely economic, the claim sounds in contract [citations]; but a breach of implied warranty claim alleging damages for death or personal injury sounds in tort, [citations].” (JCW Electronics, supra, 257 S.W.3d at p. 705.)

We agree with Brighton that, because it sought only economic damages, application of this rule leads to the conclusion that its implied warranty claim sounds in contract for purposes of awarding attorney fees. Nonetheless, there is nothing in JCW Electronics or Howard to suggest the same general rule would not apply in the context of a collateral source rule analysis. In other words, it appears that under Texas law, Brighton’s claim would be categorized the same way for purposes of awarding attorney fees and for purposes of a collateral source rule analysis. Brighton, however, argued its claim sounded in contract for purposes of attorney fees, but sounded in tort for purposes of the collateral source rule. Such positions are totally inconsistent.

The trial court properly applied the judicial estoppel doctrine and refused to entertain Brighton’s argument that its claim sounded in contract. As Brighton appears to concede, this defeats its claim for attorney fees under California and Texas law. Therefore, we need not decide which state’s law to apply.

DISPOSITION

The judgment and order are affirmed. AIF is awarded its costs on appeal.

BIGELOW, P. J.

WE CONCUR:

GRIMES, J.

STRATTON, J.