Facts

Plaintiff was McMillan Systems Inc., a computer network consulting company located in Fresno. In December of 2002, the plaintiff's employees reached a verbal agreement with representatives from defendant Vision Care Center dba EYE-Q Vision Care Medical Group Inc. and Eyes on Fresno LLC. The plaintiff's responsibilities were to move and consolidate defendant’s collective Internet and network technology equipment to a central and consolidated location in Fresno. The agreement included an hourly labor rate and an estimate of how long the “move” project would take to complete.

After coming to this agreement, the plaintiff considered it a memorandum of understanding under which it had provided the two companies an adequate estimate of cost. Throughout the transfer of equipment, the plaintiff claimed that it encountered several changes to the work that need to be performed. One of EYE-Q's servers crashed and the company had to buy a replacement; thus, the work order was changed to include additional equipment. As the job progressed, the nature and amount of work expanded and EYE-Q's contact person for plaintiff approved the changes to the work orders.

EYE-Q paid the first two $15,000 bills that the plaintiff provided it and then stopped paying the plaintiff.

PLAINTIFF'S CONTENTIONS:
The plaintiff sued EYE-Q and Eyes on Fresno for breach of contract and later amended its complaint to add fraud (i.e. false promise). It claimed EYE-Q intended to commit fraud against it from the onset of their agreement and had the objective to keep changing and expanding the project scope without even paying the plaintiff more than $30,000. Before trial, Eyes on Fresno was dismissed on summary judgment.

For its breach of contract claim, the plaintiff's counsel asserted that EYE-Q failed to pay for work it performed. The cost figures that the plaintiff initially provided to EYE-Q were estimates based on the scope of work. However, EYE-Q greatly expanded this scope throughout the project. The plaintiff alleged that EYE-Q intentionally withheld the true scope of work that it expected from the plaintiff with the intention of holding it to the initial estimate figure.

On the fraud claim, the plaintiff introduced an EYE-Q memorandum into evidence that showed the company only had $30,000 budgeted for the transfer when the parties had verbally agreed to hire the plaintiff for the job.

DEFENDANT'S CONTENTIONS:
EYE-Q argued that the plaintiff's invoice had too many discrepancies to warrant the amount it was charging. It claimed the plaintiff performed some work that was outside the scope of the estimate and that this work was billed in a manner inconsistent with the estimate they were provided. EYE-Q was unclear what it was being charged for because it alleged that it never received a bill that differentiated charges associated with work that was added on to the initial estimate. The defense did concede that the job eventually included the addition of additional hardware and software, which were not part of the estimate. However, it felt that there were irregularities in the bill it received from the plaintiff for this additional work.

Settlement Discussions

The plaintiff made a demand of $130,000 (C.C.P. Section 998) in February 2005, and $350,000 before trial. The defendant's offer was $75,001 (C.C.P. Section 998).

Damages

The plaintiff only received $30,000 on the $150,000 bill to EYE-Q and Eyes on Fresno. It sought damages for the balance of the bill plus interest.

Result

The jury found in favor of plaintiff. It found EYE-Q was liable for breach of contract and awarded the plaintiff $285,000. It did not find EYE-Q committed fraud. The trial judge denied the defendant's request for a retrial of compensatory damages as well as plaintiff's request for a retrial on the fraud claims. The judge granted a remittitur and entered judgment for the plaintiff for the original contract amount plus interest, in addition to costs and attorney fees per the denied C.C.P. Section 998 offer. Thus, the resulting judgment was $186,669.

Deliberation

four hours

Poll

9-0

Length

three weeks