NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

BEDSWORTH, J.

I. INTRODUCTION

The main issue in this proceeding is whether the jury's award of $144,738 for breach of an exclusive distributorship agreement and award of another $402,361.50 for breach of the implied covenant of good faith and fair dealing was duplicative. We agree with appellant Forespar Products Corporation (Forespar) that there is certainly a danger that the allegation of two causes of action — breach of contract and breach of the implied covenant — can result in duplicative damages outside of the insurance context. But a single contract can be breached in multiple ways, so as to give rise to different categories of contract damages. Here, the $144,738 and the $402,361.50 were simply two different categories of contract damages, even if one category was called breach of the implied covenant. The $144,738 was for Forespar's failure to maintain adequate inventories; the $402,361.50 was for Forespar's marketing of a competing product. In substance, there was no duplication, so the judgment must be affirmed.

The balance of Forespar's contentions on appeal, as those made in the plaintiff's cross-appeal, are likewise unpersuasive. Accordingly we affirm the judgment in its entirety.

II. BACKGROUND

The plaintiff in this litigation is a division of Artelier Studio, LLC known as "Truplug." It invented and patented a conical device, called the "TruPlug," that is used to temporarily plug holes in boat hulls so they can get back to shore. We will refer to Truplug the company — no capital P — in this opinion as this opinion as the "plaintiff" so readers will not confuse it with its product, the TruPlug — the conical device with a capital P.

Plaintiff needed a distributor, so it entered into a distributorship contract with Forespar to distribute the TruPlug. There are two parts to the contract that concern this appeal. One was Forespar's promise to maintain "adequate inventories." The other dealt with the degree to which Forespar might — or might not — be allowed to manufacturer and market a product that competes with the TruPlug device. The adequate inventory provisions required Forespar to "endeavor to maintain adequate inventories" of TruPlugs (called "Licensed Products" in the agreement) with plaintiff obligated to deliver ordered products within 84 days. The competing product provisions involved two sections that, at least on first glance, appear to be in tension with each other, if not conpletely contradictory. Section 7 absolutely forbade Forespar to manufacture the TruPlug. But section 16.2 appeared to allow Forespar to market a product that would "duplicate" the TruPlug. We quote both sections in the margin1 and discuss them in more detail in part III.

Between December 2009 and October 2011 Forespar ordered over 24,000 units of TruPlugs. During this time frame, plaintiff shared confidential concepts and designs with Forespar for a second version of the product to be used in larger vessels. However, once it began receiving the TruPlugs it ordered, Forespar became dissatisfied. Specifically — at least according to its side of the story — Forespar found the product to be deficient in quality (among other things there were small variations in weight from unit to unit), particularly after plaintiff switched factories from mainland China to Taiwan. Worse, from Forespar's point of view, plaintiff effectively wiped out Forespar's profit margins by increasing its price from $5.50 to $8.50 per unit.

After several letters, Truplug agreed some plugs were nonconforming, and eventually replaced the product. But Forespar contended this slow response caused it to miss opportunities during the boating high season.

Forespar then decided to develop a competing product, the "Sta-plug." Like the TruPlug, the Sta-plug is a conical device; the big difference appears to be a series of ridges that seem to wrap around it. According to plaintiff, while the distributorship contract allowed Forespar access to Truplug's patented ideas, Forespar misappropriated those ideas by manufacturing and marketing the Sta-plug. Because of the extreme similarity of appearance in the two products, plaintiff asserted at trial the Sta-plug was a "clone" of the TruPlug.

This litigation began in September 2011. In 2013 plaintiff filed a first amended complaint, which added causes of action related to Forespar's sale of the Sta-Plug. Forespar filed a cross-complaint against Truplug.

The parties mediated the dispute at the end of 2013 and apparently verbally agreed to a general settlement, but with specific terms to be decided. A notice of settlement was filed in February 2014. But the parties could not agree upon written terms and the settlement was never finalized. The case was put back on calendar and proceeded to trial.

Plaintiff framed the issue to the jury using the analogy of a marriage. The distributorship agreement was a marriage between plaintiff and Forespar, and by marketing the Sta-Plug, Forespar was engaging in an act of infidelity. Forespar objected to the marriage analogy, and argued the contract was a simple business arrangement which allowed it, if it wanted, to market a competing product — the only penalty being that then plaintiff would itself be free to seek other distributors.

Before trial, Forespar filed a motion for leave to amend the cross-complaint. Forespar sought to add a cause of action for breach of an oral agreement to settle the case. The court denied that motion on the first day of trial.

After the court denied Forespar's motion for leave to amend the cross-complaint, Forespar expressed its intention to introduce evidence establishing the defense the parties had already settled the case. The court invited plaintiff to file a motion to strike affirmative defenses from the answer, which was granted. Plaintiff's motion to strike relied upon an April 2014 declaration from Forespar's attorney stating the parties had not been able to reach a final settlement.

The trial was bifurcated. The first phase of trial consisted of a jury trial on the causes of action for breach of written contract, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty. Truplug's expert witness opined Truplug's lost profits amounted to $1,691,537. The same expert calculated remedial damages and the cost of advertising to re-establish Truplug's damaged reputation as $187,800.

Using a jointly-drafted special verdict form, the jury found in favor of plaintiff on its breach of contract and breach of covenant of good faith and fair dealing claims.2 Specifically, they awarded $144,738 for the breach of contract claim and $402,361.50 on the breach of the covenant of good faith and fair dealing claim. They found in favor of Forespar on the breach of fiduciary duty claim.

During the second phase of the trial, tried to the court, plaintiff argued that Forespar used its confidential product information to develop and manufacture the Sta-Plug. Plaintiff claimed third party distributors misleadingly advertised the Sta-Plug product as if it was the TruPlug. Plaintiff also alleged consumers who saw the TruPlug advertised on Forespar's website were directed to purchase the Sta-Plug instead of the TruPlug. Ultimately, the court found in favor of Forespar on plaintiff's unfair business practices, injunctive relief, and declaratory relief claims.

The court's September 30, 2015 minute order attached a statement of decision denying plaintiff's request for equitable relief. The court concluded "that the jury's finding that [plaintiff's] informed consent to the use of its confidential information is dispositive of [plaintiff's] claim for injunctive relief and finds in favor of [Forespar] on those claims."

In early October 2015, plaintiff filed a request for a statement of decision explaining the factual and legal bases for its decision denying its request for equitable relief. The court denied Truplug's request. Forespar made a motion for a new trial, in which, for the first time, it raised the issue of whether the jury awarded duplicative damages. The new trial motion was denied, after which Forespar filed this appeal.

III. DISCUSSION

A. The Duplicative Damages Issue

There is implied into every contract a covenant of good faith and faith dealing to the effect that neither party will do anything to injure the right of the other party to receive the benefits of the agreement. (E.g., Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 751.) Outside of the insurance context, however, a breach of the implied covenant can only yield contract damages (see Guz v. Bechtel (2000) 24 Cal.4th 317, 352.) Thus there is always the danger that damages awarded for both breach of contract and breach of the implied covenant might constitute a double recovery — at least when both claims are based on the same acts. (See Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358, 1370.)

In the case before us, Forespar's opening brief asserts precisely that. The the breach of contract claim and the implied covenant claim were "two indistinguishable contract claims" that "arose out of one breach of the Distributorship Agreement." (Italics added.)

We cannot agree. We find the two claims to be distinguishable.

It requires little to imagine a contract with multiple obligations imposed on an obligor who then might breach those obligations in different ways, giving rise to different sets or "categories" of contract damages. (See Global Modular, Inc. v. Kadena Pacific, Inc. (2017) 15 Cal.App.5th 127, 151.) We believe that is what happened here: We have two distinct obligations in the same distributorship contract breached by Forespar.

One is the adequate inventory obligation. While the contract does not specifically define how many units constituted the "adequate" inventory Forespar was required to maintain, the record is clear that at some point in time Forespar had zero units in stock. The jury could reasonably determine that zero was less than adequate, hence Forespar breached that particular obligation of the contract.

The other is the prohibition on manufacture of the TruPlug under section 7. That question depended on whether the Sta-plug was a permitted "duplicate" under section 16.2, or an impermissible "Licensed Product" ("clone" was the word used in plaintiff's closing argument) under section 7. The duplicate-versus-clone dichotomy was given to the jury as a fact question, and both sides encouraged the jurors to physically compare the two products in the jury room. Having examined that physical evidence in the jury room, the jury reached the decision the Sta-Plug was a clone, not a duplicate. We note that Forespar makes no argument on appeal that the jury could not have reasonably so concluded.

Thus we have two distinct sets of contract damages, distinguishable from each other. The jury was specifically instructed not to award duplicate damages (California Civil Jury Instruction or "CACI" 3934) and we must presume the jury followed that instruction. (E.g., People v. Boyette (2002) 29 Cal.4th 381, 436.) And in that regard we note Forespar does not itemize the components of the $144,738 and the $402,361.50 to show they were necessarily duplicative. Indeed, given plaintiff's expert's calculation of almost $1.7 million in lost profits, it seems that both figures are supported by substantial evidence, so there is nothing about the amounts to suggest duplication.

However, assuming arguendo there actually was some duplication in the two figures, Forespar invited the confusion and thus waived any error. The special verdict form might have asked the jury to explicitly distinguish between two different categories of contract breaches, the breach of the adequate inventory provision and breach of the no-manufacturing provision. In that case there would have been no danger of duplication.3 Instead, both parties agreed to set up the special verdict form by first asking whether there was a breach of contract (question 3) and then asking whether there was a breach of the implied covenant. (question 6). The joint form thus set up categories roughly corresponding to the adequate inventory damages and the competing product damages.

If a special verdict form has the potential to mislead a jury, that objection must be raised prior to its submission to the jury. (See Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 131 ["BMW waived any objection to the special verdict form by failing to object before the court discharged the jury"].) Here, Forespar not only didn't object, it co-wrote the special verdict form. "`Where a party by his conduct induces the commission of error, he is estopped from asserting it as a ground for reversal' on appeal.'" (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.) The duplication argument thus fails.

B. The Oral Settlement Issue

Forespar also challenges two of the trial court's rulings related to the unconsummated settlement agreement between the parties — first the court's grant of the plaintiff's motion to strike Forespar's affirmative defense relating to the purported settlement of the case, and second the denial of Forespar's own request to amend its cross-complaint to add allegations relating to the case's purported settlement. Since the record shows there was no settlement agreement, we find no error in either ruling.

Forespar's best evidence the case was settled is a February 10, 2014 letter from plaintiff's attorney reciting general terms of a proposed settlement. This letter, however, referred to the settlement as "conditional." Forespar's own attorney acknowledged the preliminary nature of the parties' settlement, describing it as "a conceptual settlement agreement, subject to the drafting of agreed-upon written terms." These are not descriptions of a final settlement.

While contracts may be either oral or written, where "essential elements of a promise are reserved for the future agreement of both parties, no legal obligation arises `until such future agreement is made.'" (Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal.App.4th 1251, 1256, fn. omitted.) Forespar's argument the court failed to make a finding there was no oral settlement agreement (as if the parties had settled the case orally) thus relies on too fine a distinction. The court did not have to make a formal finding that no oral settlement agreement was reached because it was clear the parties had no intention of entering an oral settlement agreement; they intended to later "draft" "written terms." The record is clear the parties intended to formalize material elements of their settlement at a later date. There was simply no evidence of any effort to make any final oral agreement. There was thus no error in striking Forespar's affirmative defense.4

Next, Forespar contends the trial court erred by denying Forespar's motion to amend its cross-complaint to add a cause of action for breach of the settlement agreement. Forespar argues the court should have granted the amendment, given the general rule of liberality in permitting amendments to pleadings and the lack of prejudice to plaintiff.

While we acknowledge the strong policy in favor of liberal allowance of pleadings, a party asserting failure in this regard must show a clear abuse of discretion. (Del Mar Beach Club Owners Assn. v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898.) That was not done here. "[I]n denying leave to amend, the trial court may properly consider whether the subject matter of the amendment is objectionable, the conduct of the moving party, and the belated presentation of the amendment." (Id. at p. 914, italics added.) Since Forespar sought to amend its cross-complaint on the eve of trial and more than two years after it filed the initial cross-complaint, the trial court was well within its discretion not to allow the amendment.

C. Plaintiff's Injunctive Relief and Declaratory Relief Claims

In its cross-appeal, plaintiff contends the trial court erred by denying its claims for injunctive and declaratory relief. Again, we find no error.

Plaintiff's operative pleading sought injunctive relief for violations of Business and Professions Code section 17200, aka the Unfair Competition Law or "UCL."5 It alleged Forespar unlawfully and unfairly manufactured, advertised, distributed and sold the Sta-Plug product without its consent. Plaintiff also claimed Forespar engaged in false advertising under section 17500 and sought injunctive relief prohibiting Forespar from advertising or marketing the Sta-Plug product as if it were the TruPlug. It further sought an injunction prohibiting Forspar from marketing or distributing the Sta-Plug at all. At trial, plaintiff argued Forespar used its confidential product information to develop and manufacture the Sta-Plug. Plaintiff further claimed third party distributors misleadingly advertised the Sta-Plug product as if it were the TruPlug. It also argued consumers who saw the TruPlug advertised on Forespar's website were directed to purchase the Sta-Plug instead of the TruPlug.

During the first phase of trial, the jury found plaintiff gave informed consent for the use of its confidential information. In its statement of decision, the court determined the jury's finding that plaintiff gave informed consent to that use was dispositive of its claims for injunctive relief.

Resolving all factual conflicts in favor of Forespar, as we are required to do, we must agree. While misappropriation of confidential information does of course give rise to a section 17200 claim, here the jury determined plaintiff gave informed consent to the use of its confidential information.

Similarly, the court did not abuse its discretion in deciding Forespar did not make false or misleading statements. It is one thing to market a clone of a product, another to falsely claim the two products are the same. We find nothing in the record that Forespar was trying to pass off the Sta-Plug as the genuine TruPlug.

D. The Statement of Decision Issue

Plaintiff further claims the trial court erred by failing to discuss each prong of section 17200 in its statement of decision. But this issue has now been obviated by the California Supreme Court in F.P. v. Monier (2017) 3 Cal.5th 1099 (Monier). Monier has now established that even the total failure to issue a statement of decision is not reversible per se, but subject to harmless error review. (See id. at p. 1102.) Plaintiff has not shown any prejudicial error from the absence of an analysis of the various prongs of section 17200. The key point is that plaintiff did, indeed, consent to giving Forespar access to its confidential information.

DISPOSITION

The judgment is affirmed. Each party shall bear its own costs on appeal.

ARONSON, J., concur.

O'LEARY, P.J., Concurring and Dissenting.

I respectfully dissent to the part of the majority opinion concluding damages were not duplicative on the breach of contract and breach of the implied covenant of good faith and fair dealing causes of action. In all other respects, I concur in the majority opinion.

The jury awarded $144,738 on the breach of contract claim and $402,361.50 on the breach of the implied covenant of good faith and fair dealing claim. The majority contends the jury's awards were not duplicative because they constituted two different categories of contract damages. The majority also states Forespar was estopped from asserting error with the special verdict form, and that they must presume the jury followed California Civil Jury Instruction (CACI) No. 3934. I disagree.

Truplug's claims for breach of contract and breach of the covenant of good faith and fair dealing were based upon breaches of the same distributorship agreement (Agreement). "Regardless of the nature or number of legal theories advanced by the plaintiff, [it] is not entitled to more than a single recovery for each distinct item of compensable damage supported by the evidence." (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1159; Plotnik v. Meihaus (2012) 208 Cal.App.4th 1590, 1611-1613 (Plotnik).) The general rule is that contract damages are the sole relief available for breach of the implied covenant of good faith and fair dealing. (Fairchild v. Park (2001) 90 Cal.App.4th 919, 927.) A claim for breach of the implied covenant of good faith and fair dealing that is based upon the same acts and seeks the same relief already claimed in a companion breach of contract cause of action is duplicative and subsumed in the contract cause of action and may properly be disregarded as superfluous. (Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358, 1370.)

Truplug's cause of action for breach of contract alleged, among other things, Forespar had an obligation and duty under the Agreement to "not manufacture and/or market a competing product that effectively infringes or `duplicates' the [Licensed] Product; and [¶] [ ] not use Truplug's confidential and proprietary [Licensed] Product specifications and drawings to create, manufactur[e] and distribute Sta-Plug to the benefit of [Forespar] and detriment of [Truplug]." Truplug's cause of action for breach of the implied covenant of good faith and fair dealing also alleged Forespar was "not doing everything that the Agreement presupposed that [Forespar] would do to accomplish the purpose of the Agreement, by not being open and honest with [Truplug] regarding the orders and sales of the [Licensed] Product, and in particular, by manufacturing, advertising, distributing, and selling, without [Truplug's] consent, a competing product (Sta-Plug) that is a virtual copy, with only the slightest of modification, of [Truplug's] ideas and designs."

Truplug argues it is entitled to contract damages for both the breach of contract and the breach of the implied covenant of good faith and fair dealing. At their essence, however, the two claims alleged breaches of the underlying Agreement. Forespar's failure to maintain adequate inventories of the Licensed Product was due, in part, to the development of its competing product. Because the breaches were intertwined factually, they did not give rise to two distinct methods of recovery.

The majority contends the jury awarded $144,738 for Forespar's failure to maintain adequate inventories (breach of contract) and $402,361.50 for Forespar's marketing of a competing product (breach of the implied covenant of good faith and fair dealing). This assumption is not supported by the record. Truplug's cause of action for breach of the implied covenant of good faith and fair dealing alleged Forespar breached its obligation by failing to abide by the express terms of the Agreement, by not being honest with Truplug about sales of the Licensed Product at issue, and by manufacturing a competing product. There is no evidence the jury awarded the $402,361.50 for breach of the implied covenant of good faith and fair dealing based entirely on Forespar's marketing of a competing product. In fact, the special verdict form on the breach of the implied covenant of good faith and fair dealing cause of action asked the jury to decide only if Forespar unfairly interfered with Truplug's right to receive benefits under the Agreement.6

In addition to the factual similarities in the claims, both of Truplug's claims sought nearly identical contractual damages in the form of lost profits and future lost profits. The fact Truplug also alleged damage to its reputation for a breach of the implied covenant of good faith and fair dealing does not entitle it to additional recovery.

In Plotnik, supra, 208 Cal.App.4th 1590, a different panel of this court addressed the issue of duplicative damages, finding recovery for the same conduct would amount to double recovery. In Plotnik, the jury's special verdicts awarded plaintiffs emotional distress damages under several different theories. (Id. at p. 1612.) The court determined the awards "constituted `duplicative damages for the same transactional event,' thereby violating `[t]he rule against double recovery.'" (Ibid.) The court concluded even though there was "evidence the parties drafted the special verdicts with the intent of avoiding duplicative damage awards and that the jury intended its damage awards on each count to be separate and independent of the sums awarded on other counts[,]" allowing recovery for the same conduct amounted to impermissible double recovery. (Id. at pp. 1612-1613.)

Similarly, here, the evidence is clear the jury split one injury into two awards. The awards did not correspond to the expert's valuation of the breach of contract or breach of the implied covenant of good faith and fair dealing causes of action. In fact, the award on the breach of the implied covenant of good faith and fair dealing claim was not supported by substantial evidence. At trial, Truplug's expert opined remedial damages, such as the cost of advertising to re-establish Truplug's damaged reputation in the marine marketplace, were $187,800. The jury, however, awarded Truplug $402,361.50 on the breach of the implied covenant of good faith and fair dealing claim.

The majority also contends Forespar was estopped from asserting instructional error because it drafted the special verdict form, and that we must presume the jury followed instructions not to award duplicative damages. Forespar agreed to the special verdict forms, and the court instructed the jury not to award duplicative damages. But that does not end our inquiry. With a special verdict, the court, not the jury, should resolve concerns regarding duplicative damages. (Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th 338, 360-361 (Singh).)

Forespar did not allege instructional error. The doctrine of invited error bars a party who requests or acquiesces in a particular jury instruction from challenging that instruction on appeal. (Transport Ins. Co. v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1000.) Here, while the jury may have improperly awarded damages, there was no allegation it did so due to an improper instruction.

In fact, the court instructed the jury on duplicative damages.7 "With a single general verdict or a general verdict with special findings, where the verdict includes a total damages award, the jury presumably will follow the instruction (such as the one given here) and ensure that the total damages award includes no duplicative amounts. A special verdict on multiple counts, however, is different. If the jury finds the amount of damages separately for each count and does not calculate the total damages award, as here, the jury has no opportunity to eliminate any duplicative amounts in calculating the total award." (Singh, supra, 186 Cal.App.4th at p. 360.) "The jury should be instructed that if it reaches more than one question concerning the amount of damages, the same damages may be included in more than one answer, and that the court, rather than the jury, will resolve any concerns regarding duplication of damages." (Id. at p. 361.) Here, the court failed to resolve the duplicative damages issue when it denied Forespar's motion for a new trial on damages.

I cannot conclude the breach of contract and breach of the implied covenant of good faith and fair dealing causes of action gave rise to distinct damages that were recoverable on both claims. I would conclude the trial court erred in denying Forespar's motion for a new trial on the issue of damages. Accordingly, I would reverse and remand for a new trial on damages. In all other aspects, I would affirm the judgment.