880 F. Supp. 2d 1029
N.D. Cal.2012Background
- Altair hired JMP as financial advisor in July 2010 under a written agreement providing a contingent fee and a potential fee reduction if a Yin-tong affiliate is involved.
- In July 2011, Altair and Yin-tong completed a roughly $57.5 million transaction; JMP alleges Altair has not paid the contingent fee.
- The Agreement includes a New York choice-of-law clause and an Indemnification Agreement indemnifying JMP for claims “relating to or arising out of” the Agreement.
- JMP sued in September 2011 for breach of contract (fee and attorney-fee claim), promissory estoppel, fraud, and negligent misrepresentation.
- Altair moved for judgment on the pleadings previously; the court conducted a choice-of-law analysis and denied most claims in the First Order.
- In the current motion, the court analyzes the scope of the choice-of-law clause and grants judgment on the pleadings for certain claims, including the attorney-fee claim and tort claims under separate law analyses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of choice-of-law clause | New York law governs the contract claims. | New York law should govern only contract-based claims; California may apply to extra-contractual claims. | New York law applies to contract-based claims; California law applies to extra-contractual claims. |
| Attorney-fee indemnification provision | Indemnification language in Indemnification Agreement or Agreement covers intra-party attorney fees. | Indemnification covers only third-party claims; intra-party attorney-fee indemnification is not present. | No intra-party right to indemnification for attorney fees; attorney-fee claim dismissed with prejudice. |
| Promissory estoppel viability | Promissory estoppel stands separate from contract; reliance on Altair’s promises justifies estoppel. | Promissory estoppel cannot coexist with a bargained-for contract; there was consideration and breach under contract. | Promissory estoppel claim dismissed with prejudice. |
| Fraud and negligent misrepresentation | Altair misrepresented payment of higher fees; reliance caused damages independent of contract. | Economic loss rule bars tort claims arising from contractual promises; no independent personal damages alleged. | Fraud and negligent misrepresentation claims dismissed with prejudice under the economic loss rule. |
| Impact on contract claim for attorney fees | Contractual entitlement exists for attorney-fee recovery arising from the Agreement. | No contractual right to recover attorney fees for intra-party litigation. | Contract-based attorney-fee claim survives only to the extent consistent with New York law; other related claims dismissed. |
Key Cases Cited
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (scope of choice-of-law clause governed by California law unless specified otherwise)
- Washington Mut. Bank, FA v. Superior Court, 24 Cal.4th 906 (Cal. 2001) (scope of choice-of-law determination under California rules; foreign-law invocation)
- Hooper Associates, Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (N.Y. 1989) (indemnification for attorney fees requires clear language for intra-party coverage)
- Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168 (2d Cir. 2005) (case cited for intra-/third-party indemnification distinctions in some readings)
- Pfizer, Inc. v. Stryker Corp., 348 F. Supp. 2d 628 (S.D.N.Y. 2004) (indemnification and intra-party considerations under New York law)
- Promuto v. Waste Mgmt., Inc., 44 F. Supp. 2d 628 (S.D.N.Y. 1999) (explicit caps on damages; intra-party indemnity distinctions)
- Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979 (Cal. 2004) (economic loss rule; limits on tort recoveries for contract-based losses)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (scope of choice-of-law clause; reiterates application under California law)
- Sagittarius Broad. Corp. v. Evergreen Media Corp., 663 N.Y.S.2d 160 (N.Y. App. Div. 1997) (distinguishable weight; intra-party indemnification language)