Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc.
126 Cal. Rptr. 3d 301
Cal. Ct. App.2011Background
- Plaintiff Sonic Manufacturing Technologies, Inc. manufactured 500 modem cards for Defendant AAE Systems, Inc. under Purchase Order No. 0026667 (Apr 3, 2006).
- Contract planned First Article testing, written production release, and lot-based production with written approvals; required Factory Acceptance Test Reports to be approved in writing before shipping.
- Total price increased by $7,213.90 due to PPV/material costs; Defendant issued PO No. 0026764 confirming final PPV for PO 26667; Sonic invoiced PPV (No. 61650).
- First Article (5 cards) was tested; only four passed inspection; Defendant approved production of the first 100 boards on Oct 27, 2006; remaining 96 boards produced by Nov 7, 2006.
- Disputes arose over payment timing and whether Defendant paid for the First Article and PPV/material invoices; Defendant contended it paid for the First Article; Plaintiff sought payment for PPV and materials.
- Trial court found Defendant breached the contract by failing to pay for the First Article; Plaintiff awarded $94,269.70 plus interest; on appeal, the judgment was reversed as insufficient evidence to prove breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendant breached by failing to pay the First Article within 30 days | Sonic contends Defendant did not pay timely and owes for the First Article and PPV. | Defendant paid the First Article; no breach shown; payment timing adhered to contract and credits; trial misinterpreted evidence. | No substantial evidence of breach; reverse and enter judgment for Defendant on the complaint. |
| Whether Plaintiff proved breach to justify PPV and materials invoicing | Invoicing PPV and materials is proper due to delays and standard industry practice. | PPV invoicing and timing were not supported by contract or evidence; payment history shows prior payments offset. | Breached not proven; PPV/material invoicing cannot sustain finding of breach against Defendant. |
Key Cases Cited
- Wall Street Network, Ltd. v. New York Times Co., 164 Cal.App.4th 1171 (Cal. Ct. App. 2008) (burden of proof on plaintiff in contract breach case; standard of review for substantial evidence)
- Oldenburg v. Sears, Roebuck & Co., 152 Cal.App.2d 733 (Cal. Ct. App. 1957) (trier of fact credibility; failure-of-proof standard)
- In re I.W., 180 Cal.App.4th 1517 (Cal. Ct. App. 2009) (standard for reviewing failure-of-proof on appeal)
- Sebago, Inc. v. City of Alameda, 211 Cal.App.3d 1372 (Cal. Ct. App. 1989) (proper tailoring of issues to standard of appellate review)
- James B. v. Superior Court, 35 Cal.App.4th 1014 (Cal. Ct. App. 1995) (scope of appellate review; burden-shifting)
- Frank v. County of Los Angeles, 149 Cal.App.4th 805 (Cal. Ct. App. 2007) (reversal for insufficiency of evidence when plaintiff shows no adequate proof)