Appeal and cross-appeal from judgment of the Court of San Joaquin County (California) for plaintiffs, awarding lost profits, and for one of the defendants on personal liability in action for unfair competition.
Overview
Defendants unfairly competed with plaintiff insurance company’s insurance businesses by luring defendant’s employees, gaining sensitive business information from employees, unfairly using managerial efforts of one of the defendants, and selling plaintiff insurance company’s software enhancements. Defendants used the sensitive information to set up a business competing with plaintiff insurance company, and plaintiff insurance company sued for injunction and damages. The trial court awarded plaintiff insurance company lost profits from defendants’ unfair competition and sale of plaintiff insurance company’s software enhancements, but did not find individual liability for two of the defendants. The court reversed the judgment in that it did not find individual liability on one of the defendants and affirmed all other aspects of the judgment, finding that to the extent that plaintiff insurance company’s complaint stated claims for trade secret, breach of confidentiality, and breach of fiduciary duty, it survived preemption.
Outcome
After the conclusion of the parties closing statements, the jurors were presented with civil jury instructions. The court reversed judgment in that it did not find individual liability on one of the defendants and affirmed all other aspects of the judgment, finding that to the extent that complaint stated claims for trade secret, breach of confidentiality, and breach of fiduciary duty, it survived preemption.
Procedural Posture
Appellant seller filed a malicious prosecution action against respondents, a buyer, its owner, banks, and a bank director. The trial court dismissed the claims with prejudice. On appeal, the Court of Appeal of California, Fourth Appellate District, Division One, reversed, holding that resolution of the underlying action against the seller based on the parol evidence rule constituted a favorable termination. The court granted review.
Overview
In a breach of contract action filed by the buyer and its owner against the seller, judgment was rendered for the seller after application of the parole evidence rule, codified at Cal. Civ. Code § 1625 and Cal. Code Civ. Proc. § 1856, which prevented the admission of evidence of any agreement other than the written contract between the parties. That judgment was affirmed on appeal. In the instant malicious prosecution action, the intermediate appellate court held that such judgment constituted a favorable termination for purposes of the malicious prosecution action. On appeal, the court agreed. The court held that the parol evidence rule was a substantive rule of law, not a rule of evidence; hence, the judgment below was not based merely on a technicality. Application of the rule defined the contract at issue. The appellate court judgment in the underlying action was based on a determination that there was no breach of that contract. Such showed the seller’s innocence regarding the underlying suit’s claims and, therefore, constituted a favorable termination for malicious prosecution purposes. After the conclusion of the parties closing statements, the jurors were presented with civil jury instructions.
Outcome
The court affirmed the judgment of the intermediate appellate court.