Oki America, Inc. v. Microtech International, Inc.

872 F.2d 312 13 Fed.R.Serv.3d 731 , 27 Fed. R. Evid. Serv. 866 OKI AMERICA, INC., Plaintiff-Appellee, v. MICROTECH INTERNATIONAL, INC., Defendant-Appellant. No. 88-1561. United States Court of Appeals, Ninth Circuit. Submitted Jan. 9, 1988. * Decided April 7, 1989. Russell J. Hanlon, Berliner, Cohen & Biagini, San Jose, Cal., for defendant-appellant. James E. Jackson, Cupertino, Cal., for plaintiff-appellee. Appeal from the United States District Court for the Northern District of California. Before BROWNING, BEEZER and KOZINSKI, Circuit Judges. PER CURIAM: 1 The trial court granted Oki summary judgment on Microtech's counterclaim for the bad faith denial of the existence of a contract. Microtech appeals, claiming a genuine dispute of material fact exists as to whether Oki denied the existence of the contract. 2 The elements of this tort are: (1) the denial of the existence of a contract (2) in bad faith, and (3) without probable cause. Seaman's Direct Buying Service, Inc. v. Standard Oil Co., 36 Cal.3d 752, 769 , 206 Cal.Rptr. 354 , 686 P.2d 1158 (1984). Mere denial of liability under a contract does not suffice; the defendant must deny the existence of the contract. Quigley…

concurring:

Nowhere but in the Cloud Cuckooland of modern tort theory could a case like this have been concocted. One large corporation is complaining that another obstinately refused to acknowledge they had a contract. For this shocking misconduct it is *315 demanding millions of dollars in punitive damages. I suppose we will next be seeing lawsuits seeking punitive damages for maliciously refusing to return telephone calls or adopting a condescending tone in interoffice memos. Not every slight, nor even every wrong, ought to have a tort remedy. The intrusion of courts into every aspect of life, and particularly into every type of business relationship, generates serious costs and uncertainties, trivializes the law, and denies individuals and businesses the autonomy of adjusting mutual rights and responsibilities through voluntary contractual agreement.

I

In inventing the tort of bad faith denial of a contract, Seaman’s Direct Buying Serv., Inc. v. Standard Oil Co., 36 Cal.3d 752 , 686 P.2d 1158 , 206 Cal.Rptr. 354 (1984), the California Supreme Court has created a cause of action so nebulous in outline and so unpredictable in application that it more resembles a brick thrown…

The trial court granted Oki summary judgment on Microtech’s counterclaim for the bad faith denial of the existence of a contract. Microtech appeals, claiming a genuine dispute of material fact exists as to whether Oki denied the existence of the contract.

The elements of this tort are: (1) the denial of the existence of a contract (2) in bad faith, and (3) without probable cause. Seaman’s Direct Buying Service, Inc. v. Standard Oil Co., 36 Cal.3d 752, 769 , 206 Cal.Rptr. 354 , 686 P.2d 1158 (1984). Mere denial of liability under a contract does not suffice; the defendant must deny the existence of the contract. Quigley v. Pet, Inc., 162 Cal.App.3d 877, 890-92 , 208 Cal.Rptr. 394 (1984).

Summary judgment is reviewed de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986). We must determine, viewing the evidence in the light most favorable to Microtech, whether any genuine issue of material fact exists and whether Oki was entitled to judgment as a matter of law. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir.1986).

First, Microtech notes Oki asserted as an affirmative defense that “[tjhere was no contract entered into between the parties.” Although pleadings may give rise to…