Opinion
D072816
06-13-2018
NATIONAL CREDIT CENTER, INC., Plaintiff and Respondent, v. DUNCANVILLE N, LLC, Defendant and Appellant.
Friedman Stroffe & Gerard, Andrew R. Nelson; Maris & Lanier and Robert F. Maris for Defendant and Appellant. Woolls Peer Dollinger & Scher, H. Douglas Galt and Jeffrey A. Dollinger for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00013865-CU-BC-CTL) APPEAL from a judgment and order of the Superior Court of San Diego County, Joel R. Wohlfeil, Judge. Reversed; judgment directed. Friedman Stroffe & Gerard, Andrew R. Nelson; Maris & Lanier and Robert F. Maris for Defendant and Appellant. Woolls Peer Dollinger & Scher, H. Douglas Galt and Jeffrey A. Dollinger for Plaintiff and Respondent.
I.
INTRODUCTION
National Credit Center, Inc. (NCC), a reseller of credit bureau services, filed a complaint alleging a single breach of contract cause of action against an auto dealership named Duncanville N, LLC (Duncanville). Duncanville was one of several auto dealerships owned by a man named Clay Cooley.
Duncanville did business under the name, Clay Cooley Nissan. For ease of reference, we refer to the entity as Duncanville throughout this opinion.
After a bench trial, the trial court found that Duncanville was bound by a May 2007 agreement entered into between Fernandez GMC, Pontiac, Buick (Fernandez) and NCC (Fernandez Agreement). The Fernandez Agreement provided that NCC would be the "sole provider of credit reports for a minimum term of three years," and contained an evergreen clause that provided that the agreement would "automatically renew for three year periods unless written notice by certified mail is received at least sixty days prior to end of term."
Fernandez is not owned by, or affiliated with, Clay Cooley.
" 'Evergreen clauses' provide that the term of the contract will be extended for some specified period beginning with the date of expiration of the primary term." (Vulcan Materials Co. v. Atofina Chemicals Inc. (D.Kan. 2005) 355 F.Supp.2d 1214, 1240.)
The trial court found that another of Clay Cooley's auto dealerships, Clay Cooley GMC LP (Clay Cooley GMC), and Duncanville were both bound by the Fernandez Agreement pursuant to Civil Code section 1589 because each entity purportedly availed itself of the benefits of that agreement. (See § 1589 ["A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting"].) According to the trial court, Clay Cooley GMC became bound by the Fernandez Agreement after purchasing the assets of Fernandez in March 2007 and availing itself of the benefits of the Fernandez Agreement. The trial court further found that Duncanville became bound by the Fernandez Agreement after availing itself of the benefits of the Fernandez Agreement when it commenced operations in June 2010. Although Cooley owned both Duncanville and Clay Cooley GMC, the trial court expressly found that Duncanville was not bound by the Fernandez Agreement as a successor entity to Clay Cooley GMC.
Unless otherwise specified, all subsequent statutory references are to the Civil Code.
The trial court found that Clay Cooley GMC did not enter into the Fernandez Agreement. The court did not expressly address whether Clay Cooley GMC was a successor to Fernandez.
This determination is not challenged on appeal.
After finding that Duncanville was bound by the Fernandez Agreement, and implicitly finding that the Fernandez Agreement had renewed in May 2010, the trial court found that the Fernandez Agreement had automatically renewed again, pursuant to the evergreen clause, in May 2013, and that Duncanville breached the Fernandez Agreement "on about April 30, 2013," by failing to use NCC as its sole provider of credit reports after that date. The court found that NCC suffered $141,756 in damages by way of lost profits that it would have earned if Duncanville had continued to use NCC's services for the three-year period ending in May 2016 and entered a judgment in favor of NCC in that amount. The court subsequently awarded NCC $105,866 in attorney fees pursuant to a provision in the Fernandez Agreement stating that the prevailing party in any litigation involving the agreement was entitled to recover its reasonable attorney fees.
On appeal, Duncanville claims that there is not substantial evidence to support the trial court's finding that it voluntarily accepted the benefits of the Fernandez Agreement and was therefore bound by the evergreen clause in the agreement. We agree and conclude that there is no substantial evidence in the record to support the trial court's finding that Duncanville voluntarily accepted the benefits of the Fernandez Agreement. Accordingly, we reverse the judgment in favor of NCC. In light of our reversal of the judgment, we necessarily reverse the attorney fee order in favor of NCC. We remand the matter to the trial court to enter judgment in favor of Duncanville.
Duncanville also claims that NCC failed to adequately prove the "essential element of damages." In light of our reversal of the judgment with directions to enter a judgment in favor of Duncanville, we need not consider this argument.
II.
FACTUAL BACKGROUND
A. The parties
NCC provides credit reports and various ancillary products related to these reports to its clients. It buys the reports in bulk from the three major credit bureaus—TransUnion, Equifax and Experian—and then resells the reports to its clients at a discount from the rates that the clients would have to pay if they were to buy them directly. According to Kenneth Suprenant, Jr., NCC's Senior Vice-President of Data Solutions, NCC requires its clients to enter into long term contracts with NCC in order to obtain "discounted rates" with the bureaus, and to ensure regulatory compliance.
Suprenant explained that both federal law and the three major credit bureaus require that NCC have a written contract with its customers.
Duncanville is a Nissan automobile dealership in Dallas, Texas that does business under the name Clay Cooley Nissan. Cooley owns Duncanville. B. The Motor Company Agreement
In November 2006, NCC entered into an agreement with Clay Cooley Motor Company (Motor Company Agreement) to provide credit reporting services to Clay Cooley Motor Company. The Motor Company Agreement lists Clay Cooley Motor Company's address as 10849 Composite Drive, Dallas, Texas, 75220. As discussed in footnote 24, post, the Motor Company Agreement provides that NCC will be a nonexclusive provider of credit reports to Clay Cooley Motor Company. Thomas Bies signed the agreement on behalf of Clay Cooley Motor Company. Cooley owns Clay Cooley Motor Company. C. Clay Cooley GMC
Cooley formed Clay Cooley GMC in March 2007. Clay Cooley GMC entered into an asset purchase agreement with Fernandez (Fernandez Asset Purchase Agreement) for the purpose of acquiring an auto dealership that same month. In addition to being the owner, Cooley was president and general manager of Clay Cooley GMC. D. The Fernandez Agreement
On May 21, 2007, NCC entered into the Fernandez Agreement. While the Fernandez Agreement identifies the client as "Fernandez GMC, Pontiac, Buick DBA-Clay Cooley Motor Co.," there is ample evidence that this was done because Clay Cooley GMC was unable to enter into contracts at the time the Fernandez Agreement was executed. A man named Pedro Larrea executed the Fernandez Agreement. Larrea was one of Cooley's employees and became finance manager of Clay Cooley GMC. Larrea identified himself as "FI DIRECTOR," in the agreement. The Fernandez Agreement identifies the client contact person as "Thomas Bies," the signatory of the Motor Company Agreement. Bies often assisted Cooley with his new car franchises. Cooley agreed that, during the week that the Fernandez Agreement was signed, Clay Cooley GMC was likely "setting up everything [it] needed for the dealership . . . ."
The Fernandez Agreement provides that NCC will furnish credit reports at three stated prices from each of the three credit bureaus, as well as three "[a]ncillary [p]roducts," described as "Report, Score, Summary, and OFAC." The Fernandez Agreement contains an exclusivity provision and an evergreen clause that provides:
"The client agrees to use NCC as their sole provider of credit reports for a minimum term of three years at the price per credit report on application [sic]. This term agreement will automatically renew for three year periods unless written notice by certified mail is received at least sixty days prior to end of term."E. Clay Cooley GMC's relationship with NCC
On October 30, 2007, NCC received a facsimile showing Clay Cooley GMC's Texas state license number. In December 2008, Clay Cooley GMC entered into an agreement entitled, "Red Flag Compliance Package National Credit Center Addendum," (some capitalization omitted) with NCC.
The facsimile header indicated that it came from "FERNANDEZ GMC." However, given the October 30, 2007 date, which was several months after the closing of the Fernandez Asset Purchase Agreement, NCC argued that it was Clay Cooley GMC that had sent the facsimile. NCC's counsel argued, "It's obvious to me, your Honor, that they continued to use the fax machine and nobody went through the trouble . . . of changing [the header]."
Clay Cooley GMC operated for approximately three years at 39690 LBJ Freeway South, Dallas, Texas between May 2007 and May 2010.
Clay Cooley GMC used NCC's services during this period. F. Clay Cooley GMC's sale of assets to Duncanville Chevrolet, LLC
NCC presented no evidence that Clay Cooley GMC used its services prior to January 2009. At trial, Duncanville's counsel asked Suprenant, "In your review of business records of [NCC] were you able to ascertain why there was no invoicing done between May 21 of 2007 and January 2009?" Suprenant testified, "I cannot answer that."
NCC offered in evidence a spreadsheet entitled "Invoices for Clay Cooley Nissan." We assume for purposes of this decision that the trial court could reasonably find that the invoices between January 2009 and June 2010 (when Duncanville commenced operations) pertained to Clay Cooley GMC since Suprenant testified that NCC had changed the name on the customer file in July 2010 to Clay Cooley Nissan.
In May 2010, Clay Cooley GMC and Duncanville Chevrolet, LLC (Chevrolet) entered into an asset purchase agreement (Chevrolet Asset Purchase Agreement). Pursuant to this agreement, Clay Cooley GMC sold certain of its personal property assets to Chevrolet. The Chevrolet Asset Purchase Agreement does not expressly refer to the Fernandez Agreement. G. Duncanville begins operations
Neither party contends that the Chevrolet Asset Purchase Agreement has any effect on the issues in this case. Accordingly, we assume for purposes of this decision that none of the provisions of Chevrolet Asset Purchase Agreement are material to the issues on appeal.
In March 2010, Cooley purchased a Nissan dealership and relocated it to the same physical location where Clay Cooley GMC had previously been located. Cooley formed Duncanville for the purpose of operating the new Nissan dealership that same month. Duncanville began operating in June 2010. H. Duncanville's relationship with NCC
On July 19, 2010, Cooley's assistant sent NCC a letter that stated in relevant part:
"Following is the license for [Duncanville] which is located at:
Clay Cooley Nissan
39690 LBJ Freeway
Dallas, Texas 75237
[phone number]"
Accompanying the letter was Duncanville's dealer license information. NCC placed this document in the file it maintained for Fernandez. After receiving the letter, NCC changed the customer name on the Fernandez file to Clay Cooley Nissan.
Upon its formation, Duncanville began to use NCC's services. NCC sent Duncanville invoices for its services. Cooley signed many checks to NCC on behalf of Duncanville. As discussed in part III.C, post, Duncanville, through its finance manager, Joshua Woo, entered into an agreement with NCC to purchase a product called Credit Model 6.3 (Credit Model 6.3 Agreement) in December 2012.
As noted in footnote 10, ante, the record contains a spreadsheet entitled "Invoices for Clay Cooley Nissan," that lists invoices beginning in January 2009.
The invoices in evidence begin in May 2012. NCC was unable to provide invoices for services prior to this date due to a change in its accounting software that resulted in a loss of certain data.
The Credit Model 6.3 Agreement lists "Clay Cooley Nissan" as the business name, and states that it was authorized by "Josh Woo" whose title is "Finance Manager," on December 27, 2012 through an "E-signature."
I. Duncanville stops using NCC's services
Suprenant stated that NCC never received any communication from Duncanville indicating that it wished to terminate the Fernandez Agreement. In approximately April 2013, Duncanville ceased using NCC's services and began to order credit reports directly from the three credit bureaus. NCC would have earned a gross profit of $141,756 for the three-year period from May 2013 through May 2016 if Duncanville had continued to use NCC's services. J. Clay Cooley Suzuki's relationship with NCC
Suprenant testified that because Duncanville had not terminated the Fernandez Agreement, the agreement renewed in May of 2013 and continued in effect through May 2016.
One of Cooley's other dealerships was named Clay Cooley Isuzu. Clay Cooley Isuzu operated out of the premises at 10849 Composite Drive, Dallas, Texas, the same location of Clay Cooley Motor Company. In 2010, Cooley opened Clay Cooley Suzuki at the "same location where Clay Cooley Isuzu had been."
Cooley testified, "I moved the Suzuki in there after Isuzu went away."
Cooley's assistant provided NCC with Clay Cooley Suzuki's license information in July 2010. NCC sent Clay Cooley Suzuki three invoices in 2012 and 2013, and Clay Cooley Suzuki sent NCC checks in payment for those invoices. The record contains no evidence of any written agreement between NCC and Clay Cooley Suzuki.
III.
DISCUSSION
The record lacks substantial evidence to support the trial court's finding that
Duncanville became bound by the Fernandez Agreement by voluntarily
accepting the benefits of that agreement
Duncanville claims that the record does not contain substantial evidence to support the trial court's finding that it accepted the benefits of the Fernandez Agreement and thereby became bound by that agreement. A. Factual and procedural background
In its opening brief, Duncanville structured this contention in arguments contained under two separate headings: "Section 1589 could not have imposed obligations included in the [Fernandez Agreement] on Duncanville," (some capitalization omitted) and, "The finding that Duncanville knew or should have known of the [Fernandez Agreement] is not supported by substantial evidence." (Some capitalization omitted.) In its brief, NCC responded to these contentions by arguing in part, "There is substantial evidence Duncanville . . . voluntarily accepted the benefits of the [Fernandez Agreement]." (Some capitalization omitted.) In its reply, Duncanville joined these two arguments under a single heading, contending, "Duncanville requested services from NCC with no notice that it would be assuming obligations of the [Fernandez Agreement]."
In its statement of decision, the trial court found that Duncanville was bound by the Fernandez Agreement for the following reasons:
"The Court is persuaded that, based on representations of Clay Cooley (through the checks he signed for remission to [NCC]) and Joshua Woo as finance director, [NCC] was induced to provide the
full performance of credit report products to [Duncanville]; [Duncanville] received the benefits of [NCC's] full performance of credit report products; and [Duncanville] accepted the burdens of [NCC's] full performance under the 'terms of ([NCC's]) service agreement' (Exh's '15, 16')[] and the 'existing agreement between Client and (Plaintiff).' Exh's '19, 20.'[] [Duncanville] agrees that Cooley, as [Duncanville's] general manager, was authorized to speak on behalf of, and to bind, Defendant. [Citation]. In addition, [NCC] has carried its burden to show that Woo was [Duncanville's] ostensible agent . . . [Citation].
"The information contained in credit reporting products is both confidential and legally protected. Credit reporting products are important to, if not the lifeblood of, [Duncanville's] business. The Court heard Cooley, who impressed the Court as exceptionally astute, testify to his aversion to vendor contracts with long-term commitments; however, the Court is persuaded that [NCC's] business model, as testified to by Suprenant, of long-term commitments with its customers is commercially reasonable, and is consistent with [NCC's] effort to memorialize a contractual relationship with [Duncanville]. Exh's '14-16, 19, 23.'[] [NCC] has carried its burden that [Duncanville] was bound by the credit
reporting services contract (Exh. '7') with [NCC] before May 1, 2013 because [Duncanville] availed itself of the contract benefits."B. Governing law and standard of review
Exhibit 15 is a series of invoices covering the period May 2012 through January 2014, from NCC to Duncanville.
Exhibit 16 consists of copies of checks for payments made by Duncanville to NCC during the period August 2011 through December 2013.
Exhibit 19 is a copy of the Credit Model 6.3 Agreement.
Exhibit 20 is referred to in the record as a "Salesforce note dated 1/4/13 re: model 6.3 activation." Although the trial court refers to Exhibit 20 in its statement of decision, the exhibit was never admitted in evidence. However, Duncanville does not assert any claim of error with respect to the court's reference to Exhibit 20 in its statement of decision.
Exhibit 14 is the July 19, 2010 letter from Cooley's assistant to NCC, together with documentation of Duncanville's automobile dealer license information.
Following the letter are documents demonstrating Duncanville's licensure to sell motor vehicles in the State of Texas.
Exhibit 23 is the spreadsheet referenced in footnotes 10 and 12. The spreadsheet has various columns, including the date and amount of the invoice. Exhibits 15, 16 and 19 are described in footnotes 18 and 19, ante.
Exhibit 7 is the Fernandez Agreement.
Section 1589 provides:
"Assumption of obligation by acceptance of benefits. A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting."
We review, for substantial evidence, the trial court's implied finding that Duncanville was bound by the Fernandez Agreement pursuant to section 1589 because it availed itself of the benefits of that agreement. (See Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc. (2015) 240 Cal.App.4th 763, 773 [citing section 1589 and stating "substantial evidence supports the court's conclusion regarding the existence of a contract"].)
The trial court expressly relied on section 1589 in determining that Clay Cooley GMC was bound by the Fernandez Agreement. Although the trial court did not specifically cite section 1589 in that portion of its decision pertaining to Duncanville, the court implicitly relied on the statute in ruling that Duncanville was bound by the Fernandez Agreement because it "availed itself of the contract benefits."
" 'Substantial evidence' is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.] . . . Inferences may constitute substantial evidence, but they must be the product of logic and reason. Speculation or conjecture alone is not substantial evidence. [Citations.] . . . [¶] The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record." (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651-652.) C. Application
In its statement of decision, the trial court indicated that evidence that Duncanville purchased, and paid for, credit reports from NCC supported its finding that Duncanville had availed itself of the benefits of the Fernandez Agreement. We disagree.
To begin with, "[while] [i]t is true as a general proposition that the acceptance of the benefits of a transaction is equivalent to a consent to all of the obligations arising from it (Civ. Code, sec. 1589); . . . this rule has application only where the statute does not specify the character of the contract requisite to liability, and this section . . . evidently refers to contracts not required by the statute to be in writing." (Boyd v. Big Three Ranch Co. (1913) 22 Cal.App. 108, 110 (Boyd), italics added.) In this case, it is undisputed that the Fair Credit Reporting Act (15 U.S.C. § 1681 et. seq.) required NCC to "have a signed, completed contract on file with [NCC's] customers." It is also undisputed that there is no written contract between NCC and Duncanville. Under these circumstances, it appears that section 1589 may not be used to enforce an unwritten agreement between NCC and Duncanville, since federal law requires such agreements to be written. (See Boyd, supra, at p. 110.) However, since the parties do not address Boyd in their briefs, we assume strictly for purposes of this opinion that Boyd does not defeat NCC's claim as a matter of law.
Duncanville's counsel asked Suprenant, "[I]s there a[n] obligation under the Fair Credit Reporting Act that requires that you have a signed, completed contract on file with your customers?" Suprenant responded affirmatively.
At trial, Suprenant also agreed with Ducanville's counsel that "it's the policy of [NCC] to have a written contract with all of its customers," and that "each of the three major reporting agencies . . . all require that [NCC] have written contracts with each of your customers."
However, even assuming that NCC may enforce, by way of evidence of a course of dealing only, a contract that federal law requires to be in writing, there is no evidence in the record that Duncanville, through its purchases of credit reports from NCC, was accepting the benefits of the Fernandez Agreement.
Suprenant testified that, as of 2013, NCC had two customer files "regarding dealerships with the name of Clay Cooley." According to Suprenant, one of the files included the Fernandez Agreement, and the second contained the Motor Company Agreement. Neither agreement mentions Duncanville. Further, there is no evidence that Duncanville ever mentioned the Fernandez Agreement in correspondence with NCC, nor is there any evidence that NCC referred to the Fernandez Agreement in its course of dealing with Duncanville.
Suprenant acknowledged that the Motor Company Agreement did not contain a provision mandating that NCC was to be the sole provider of credit reports to Clay Cooley Motor Company. Moreover, the record contains evidence that NCC provided credit reporting services to Clay Cooley Suzuki, and there is no evidence of any written agreement between NCC and Clay Cooley Suzuki.
The Motor Company Agreement appears to be the same form contract as the Fernandez Agreement, with one significant amendment. The Fernandez Agreement provides, "The client agrees to use NCC as their sole provider of credit reports for a minimum term of three years at the price per credit report on application." In the Motor Company Agreement, the words "their sole provider," are crossed out and the words "a provider," are written in their place, thereby removing the exclusivity provision.
Exhibit 27 contains three invoices from NCC to Clay Cooley Suzuki and three checks from Clay Cooley Suzuki to NCC in payment for those invoices. NCC did not present any evidence of an agreement with Clay Cooley Suzuki.
Under these circumstances, we agree with Duncanville's summary of the state of the evidence:
"[T]here was simply no evidence presented demonstrating that the 'benefits' Duncanville accepted from ordering credit reports were anything other than benefits received from Duncanville's discrete requests for credit reporting services to NCC (i.e., a straightforward, at-will invoicing relationship akin to the at-will invoicing relationship [Clay] Cooley Suzuki had with NCC); and not flowing from the Services Agreement with Fernandez (Exhibit 7), the services agreement with Clay Cooley Motor Company (Exhibit 6), the at-will invoicing relationship with [Clay] Cooley Suzuki, or any other contract, agreement, or commercial relationship with any other Clay Cooley dealership."
The case that NCC cites in support of its contention that section 1589 may be applied to bind nonparties to an agreement, NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64 (NORCAL), involved factual circumstances entirely distinct from those in this case. In NORCAL, the defendant and her husband (the Newtons) were sued for malpractice. (Id. at p. 66.) The husband was insured by a medical malpractice insurance policy issued by an insurer. (Ibid.) The Newtons tendered the complaint to the insurer, seeking defense and indemnity on behalf of both husband and wife. (Id. at p. 67.) The insurer agreed to provide the wife a defense with a reservation of rights, but explained that the relevant insurance policy did not " 'extend coverage' " to her. (Id. at p. 68.) The insurer thereafter funded a settlement of the claims. (Id. at p. 81.)
After settlement of the underlying action, a dispute arose between the insurer and the Newtons pertaining to how the settlement would be reported to a medical practitioner "data bank." (NORCAL, supra, 84 Cal.App.4th at p. 69.) The insurer sought to arbitrate the dispute pursuant to an arbitration provision in the policy. (Id. at pp. 70, 72.) Among other arguments, the insurer contended that the wife "was bound by the arbitration provision of the insurance policy because she sought and accepted the benefits of that policy." (Id. at p. 72.)
In concluding that the wife had accepted the benefits of the insurance policy and was therefore bound by the arbitration contained in the policy pursuant to section 1589, the NORCAL court explained that "[i]n tendering the complaint to [the insurer] for defense and indemnity, the Newtons, through their counsel, asked [the insurer] to provide coverage under the policy to [defendant] as well as [her husband]." (NORCAL, supra, 84 Cal.App.4th at p. 77.) The NORCAL court also noted that the wife had "accepted [the] benefits [of the insurance policy] by allowing [the insurer] to assume the cost of her defense and, together with [her husband], requesting and participating in NORCAL's settlement of the complaint . . . ." (Id. at p. 78.)
Thus, in NORCAL, there was abundant evidence that the wife sought and obtained services from the insurer pursuant to a specific agreement (i.e., an insurance policy), including requesting that she be provided a defense pursuant to the policy. (NORCAL, supra, 84 Cal.App.4th at pp. 77-78.) Indeed, the NORCAL court expressly noted that the wife received "a defense that would not have been available to her but for the [insurance] policy." (Id. at p. 83.) In contrast, in this case, as described above, there is no evidence that NCC provided credit reporting services to Duncanville pursuant to the Fernandez Agreement.
The trial court also suggested that NCC's invoices and the Credit Model 6.3 Agreement supported a finding that Duncanville had accepted the benefits of the Fernandez Agreement. We disagree. With respect to the invoices, boilerplate language stating, "All information reflected on this invoice and/or any attachments hereto are considered confidential pursuant to the terms of the NCC service agreement and should not be disclosed to any third parties," did not apprise Duncanville that it was ordering credit reporting services pursuant to the Fernandez Agreement. (Italics added.) At most, such a provision could be read to alert Duncanville that NCC was providing the information subject to confidentiality provisions contained in the "NCC service agreement." Further, since the next sentence of the invoice provides, "By continuing to access the services of NCC you, the Client, hereby agree to the current terms and conditions for use of NCC's services as outlined at www.nccdirect.com," the invoice suggested that the NCC service agreement was contained on the referenced Web site. There is no evidence that the terms and conditions outlined at this Web site included the relevant provisions of the Fernandez Agreement, including the evergreen clause and the date by which Duncanville was purportedly required to terminate the agreement or be subject to that clause's automatic renewal provision.
There is also no language in the Credit Model 6.3 Agreement demonstrating that Duncanville was obtaining NCC's services pursuant to the Fernandez Agreement. The Credit Model 6.3 Agreement provides, "All terms and conditions of any existing agreement between Client and National Credit Center still apply." (Italics added.) The italicized words suggest that there may or may not be an existing agreement between the client (i.e., Duncanville) and NCC. Such language clearly is not sufficient to bind Duncanville to an agreement between NCC and a third party. Nor is there any other evidence in the record supporting the inference that, by entering into the Credit Model 6.3 Agreement, Duncanville was accepting the benefits of the Fernandez Agreement.
The trial court suggested that the importance of credit reporting services to Duncanville's business and Suprenant's testimony that NCC entered into "long-term commitments with its customers," supported its finding that Duncanville had accepted the benefits of the Fernandez Agreement. Neither fact supports such a finding. Even assuming that credit reporting services were important to Duncanville's business and that NCC's "business model," as the trial court stated, is "commercially reasonable," there was no evidence from which a reasonable fact-finder could find that Duncanville could obtain credit reporting services from NCC only through long-term contracts that required it to purchase credit reports exclusively from NCC. On the contrary, as noted above, the record contains evidence both that NCC entered into a nonexclusive contract with Clay Cooley Motor Company to provide credit reports, and evidence that NCC provided credit reporting services to Clay Cooley Suzuki without any written agreement. Thus, no reasonable fact-finder could find that the only way that Duncanville could obtain NCC's services was pursuant to the Fernandez Agreement.
Suprenant testified that all of NCC's clients were required to sign the same form contract that formed the basis of the Fernandez Agreement. Suprenant was asked, "Customers are not allowed to vary any of the terms of the contract, are they?" Although Suprenant answered "No," his testimony in this regard is inconsistent with the Motor Company Agreement, which, as discussed in footnote 24, ante, was modified to delete the exclusivity provision. Indeed, Suprenant acknowledged at trial that the Motor Company Agreement "did not state 'as sole provider,' for credit bureau services." Thus, Suprenant's testimony does not constitute substantial evidence from which the trial court could find that the only manner by which Duncanville could obtain credit reporting services from NCC was through an agreement with an exclusivity provision.
Finally, the trial court referred to NCC's "effort to memorialize a contractual relationship with [Duncanville," and cited Exhibits 14, 15, 16, 19, and 23. None of these exhibits supports a finding that Duncanville accepted the benefits of the Fernandez Agreement. Exhibits 15 (invoices), 16 (checks), and 23 (spreadsheets of invoices) support the uncontested point that Duncanville purchased credit reports from NCC. However, they do not constitute evidence that Duncanville purchased those reports pursuant to the Fernandez Agreement. Exhibit 19 is the Credit Model 6.3 Agreement, which, as explained above, also does not contain any evidence that Duncanville accepted the benefits of the Fernandez Agreement. Finally, Exhibit 14 is a letter from Duncanville to NCC providing its dealership licensing information. The letter and dealership licensing information do not contain any language suggesting that Duncanville was requesting credit reports pursuant to the Fernandez Agreement.
At trial, Suprenant testified, "The purpose of . . . Exhibit 14 is to notify us of the name change to Clay Cooley, and that would be the purpose of this and the supporting documentation with the dealer license . . . ." However, Suprenant also acknowledged that he had not started working for NCC until three years after the letter was generated and that he had "no personal knowledge at all as to why this letter [i.e., the letter associated with Exhibit 14] was sent."
Further, there is no other evidence in the record demonstrating that Duncanville sent NCC the documents contained in Exhibit 14 in connection with a name change. In addition, there is no evidence that Clay Cooley GMC ever changed its name to Duncanville and, as noted in part I, ante, the trial court expressly found that Duncanville was not bound to the Fernandez Agreement as Clay Cooley GMC's successor. Thus, Suprenant's testimony does not constitute substantial evidence that Duncanville sent Exhibit 14 to NCC in connection with a name change.
NCC's attempt to cite to substantial evidence in the record in support of the trial court's finding that Duncanville accepted the benefits of the Fernandez Agreement fares no better. NCC argues:
"There is also substantial evidence that, when Duncanville . . . took over operations at the 39690 LBJ Freeway location, it also accepted the benefits of the [Fernandez Agreement]. Thus Duncanville . . . provided NCC with its license and dba information. [Ex. 14] For [three] years, Duncanville . . . regularly purchased - it was billed for and it paid for - NCC's product. [Exs. 15, 16.] In addition, there is evidence that Duncanville . . . arranged to receive an ancillary product - Credit Model 6.3 - from NCC. [Ex. 19.]"
While there was evidence that the Credit Model 6.3 Agreement was an ancillary product in the sense of supplementing a client's purchase of credit reports, as discussed above, there is no evidence that the Credit Model 6.3 Agreement was ancillary to the Fernandez Agreement.
We are aware of no authority that suggests that a finding that Duncanville accepted the benefits of the Fernandez Agreement may be based on the fact that Duncanville came to operate on the same premises as had Fernandez and Clay Cooley GMC. As Duncanville argues, to bind it to the Fernandez Agreement based on this fact would be to conclude that the agreement, " 'ran with the land,' as Duncanville's connection to the party previously obligated under the [Fernandez Agreement] was Duncanville's subsequent occupancy of the same real estate." We are aware of no principle of contract law permitting such a conclusion, and NCC cites none. We explained above that none of the other evidence that NCC refers to in its brief (i.e., Duncanville's providing its license information to NCC, NCC invoices, Duncanville's checks, or the Credit Model 6.3 Agreement) supports a finding that Duncanville accepted the benefits of the Fernandez Agreement.
As noted in part I, ante, the trial court expressly found that Duncanville was not bound to the Fernandez Agreement as the successor of Clay Cooley GMC. There is undisputed evidence supporting this unchallenged determination, including a May 4, 2010 asset purchase agreement whereby Clay Cooley GMC sold its assets to Chevrolet.
NCC also argues that there is substantial evidence that Duncanville knew, or should have known, of the terms of the Fernandez Agreement. Even assuming that the trial court could reasonably find that Duncanville knew of the terms of the Fernandez Agreement, a party is not bound by a contract merely because it has knowledge of such contract. Further, none of the evidence that NCC cites in its brief in support of its contention that Duncanville had knowledge of the Fernandez Agreement, demonstrates that Duncanville accepted the benefits of the Fernandez Agreement.
In its statement of decision the trial court found, "[NCC] provided the Court with enough corroboration that [Duncanville] knew of the existence of the [Fernandez Agreement] . . . ." We assume for purposes of this decision that there is substantial evidence to support the finding that Duncanville knew of the Fernandez Agreement, including evidence that the person who signed the Fernandez Agreement became the finance manager of Clay Cooley GMC, and Clay Cooley was the owner and general manager of both Clay Cooley GMC and Duncanville.
In fact, the evidence also supports a finding that Duncanville had knowledge of the Motor Company Agreement. Specifically, Cooley testified at trial that he owned Clay Cooley Motor Company and that he operated Duncanville. From such testimony, a reasonable trier of fact could find that Duncanville knew of the Motor Company agreement. However, NCC does not contend that Duncanville was bound by that agreement, which, as noted above, does not require the client to use NCC as its sole provider of credit reports. Indeed, at trial, Suprenant testified that NCC was not contending that Duncanville had breached the Motor Company Agreement.
In sum, after our careful review of the entire record, including all of the testimony and exhibits admitted at trial, we conclude that there is no substantial evidence in the record to support the trial court's finding that Duncanville became bound by the Fernandez Agreement by voluntarily accepting the benefits of that agreement. Accordingly, we reverse the judgment in favor of NCC on its breach of contract claim and remand the matter with directions to enter judgment in favor of Duncanville. (See Frank v. County of Los Angeles (2007) 149 Cal.App.4th 805, 833 [" ' "When the plaintiff has had full and fair opportunity to present the case, and the evidence is insufficient as a matter of law to support plaintiff's cause of action, a judgment for defendant is required and no new trial is ordinarily allowed, save for newly discovered evidence" ' "].)
In light of our reversal of the judgment in favor of NCC, we must also reverse the July 28, 2017 order awarding NCC attorney fees as a prevailing party under the Fernandez Agreement. (Lafferty v. Wells Fargo Bank (2013) 213 Cal.App.4th 545, 551 ["Since we reverse the judgment, we also reverse the award of attorney fees because Wells Fargo is no longer necessarily the prevailing party in this action"].)
On remand, upon proper motion, the trial court may reconsider the issue of prevailing party attorney fees. (See Santisas v. Goodin (1998) 17 Cal.4th 599, 611 ["To ensure mutuality of remedy in this situation, it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party's recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed"].)
IV.
DISPOSITION
The judgment is reversed. The attorney fee order in favor of NCC is reversed. The matter is remanded to the trial court with directions to enter judgment in favor of Duncanville and to conduct any necessary ancillary proceedings, including ruling on any motion for attorney fees on remand. Duncanville shall recover its costs on appeal.
AARON, J. WE CONCUR: BENKE, Acting P. J. DATO, J.