INTERNATIONAL FRUIT GENETICS LLC v. ASSET MANAGEMENT TRUST (2018)

MEMORANDUM ***

The P.E.R. Asset Management Trust and Peter and Deborah Redelinghuys (collectively “PER”) appeal a summary judgment in favor of International Fruit Genetics (“IFG”) in this diversity action arising out of IFG's termination of licensing agreements with PER. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

1. PER concedes that it imported Sugar Crisp grapes outside of South Africa's quarantine processes and self-sourced several other varieties of IFG grapes. These were Events of Default under PER's agreements with IFG, giving IFG the contractual right to terminate. Even assuming arguendo that termination could be premised only on material breaches of the agreements, these breaches were material. The violations at issue involved some 6,800 plants and related to IFG's protection of its intellectual property, “the core and crux of the contract” for IFG. Wilson v. Corrugated Kraft Containers, Inc., 117 Cal.App.2d 691, 256 P.2d 1012, 1016 (1953).

2. IFG did not waive its right to terminate the agreements because of PER's self-sourcing, as the agreements expressly disclaim waiver.

3. The parties’ course of conduct did not modify the agreements to permit self-sourcing. PER did not proffer evidence that IFG had “full knowledge” of its breach or engaged in “unequivocal conduct” demonstrating an intent to modify the agreements. See Union Pac. R. Co. v. Zimmer, 87 Cal.App.2d 524, 197 P.2d 363, 368 (1948).

4. IFG's acceptance of royalties on self-sourced grapes did not estop it from enforcing the agreements. PER could not reasonably have relied on that conduct given the agreements’ clear prohibition on self-sourcing and the no-waiver clauses. See Aceves v. U.S. Bank, N.A., 192 Cal.App.4th 218, 120 Cal.Rptr.3d 507, 514 (2011) (requiring reasonable reliance for estoppel).

5. IFG was not required to give PER the opportunity to cure before terminating the agreements. The agreements provide that certain violations, including self-sourcing, are not curable. IFG therefore did not engage in bad faith by rejecting PER's cure attempts. “[T]he duty to act in good faith does not alter the specific obligations of the parties under [a] contract.” PMC, Inc. v. Porthole Yachts, Ltd., 65 Cal.App.4th 882, 76 Cal.Rptr.2d 832, 836 (1998) (quoting Balfour, Guthrie & Co. v. Gourmet Farms, 108 Cal.App.3d 181, 166 Cal.Rptr. 422, 427 (1980)).

6. The district court's passing statement that it “weighed all of the evidence” does not establish that it failed to follow Federal Rule of Civil Procedure 56 in evaluating the summary judgment motion. The court's order, taken as a whole, makes clear that the court correctly concluded that there was no genuine issue of material fact and that PER was entitled to judgment as a matter of law.

AFFIRMED.