                            NOT FOR PUBLICATION                          FILED
                    UNITED STATES COURT OF APPEALS                        FEB 24 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

LUMENS CO. LTD., a Korean corporation,          No.    18-55221

      Plaintiff-counter-                        D.C. No.
      defendant-Appellee,                       8:14-cv-01286-CJC-DFM

 v.
                                                MEMORANDUM*
GOECO LED, LLC, a California limited
liability company,

      Defendant-counter-claimant-
      Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                   Cormac J. Carney, District Judge, Presiding

                    Argued and Submitted December 12, 2019
                             Pasadena, California

Before: KELLY,** PAEZ, and BADE, Circuit Judges.

      This case arises out of a commercial dispute between Defendant-Appellant

GoEco LED, LLC (GoEco), a California-based dealer of LED lights and fixtures,



      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
and Plaintiff-Appellee Lumens Co. Ltd. (Lumens), a Korea-based manufacturer of

the same. Lumens sued GoEco in 2014 following GoEco’s non-payment of

invoices totaling over $1 million. GoEco counterclaimed and asserted affirmative

defenses. Over the course of three years, the parties filed multiple cross-motions

for summary judgment. The district court ultimately granted summary judgment in

Lumens’s favor on nearly every issue. Lumens Co., Ltd. v. GoEco LED LLC, 14-

01286-CJC(DFMx), 2018 WL 1942768 (C.D. Cal. Jan. 3, 2018). On appeal,

GoEco argues that the district court’s judgment and subsidiary rulings should be

reversed so GoEco’s contract and tort counterclaims for damages and punitive

damages may be heard. We have jurisdiction under 28 U.S.C. § 1291 and we

affirm.

      Because the parties are familiar with the facts and procedural background,

we need not restate them here.

                                 STANDARD OF REVIEW

      Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). We review the district court’s grant of

summary judgment de novo, construing the facts in the light most favorable to the

nonmoving party. Santopietro v. Howell, 857 F.3d 980, 987 (9th Cir. 2017).

However, “[r]ulings regarding evidence made in the context of summary judgment



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are reviewed for an abuse of discretion.” Wong v. Regents of Univ. of Cal., 410

F.3d 1052, 1060 (9th Cir. 2005). A party cannot rest on its pleadings in opposing

summary judgment; “[i]f the evidence is merely colorable, or is not significantly

probative, summary judgment may be granted.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 249–50 (1986) (internal citations omitted).

                                       DISCUSSION

      GoEco primarily contends that because Lumens and GoEco contracted for

the sale of goods, Division 2 of the Uniform Commercial Code (U.C.C.), as

adopted in California, should have governed the agreement. GoEco argues in the

alternative that if the U.C.C. were found not to apply to its transactions with

Lumens, it provided sufficient evidence on its alleged damages to survive

summary judgment. Additionally, GoEco claims that the district court erred by

failing to address its affirmative defenses.

A. U.C.C. Issue

      GoEco first contends that the district court should have applied Division 2 of

the U.C.C. when making its damages calculations. GoEco argues that because the

2013 Memorandum of Understanding (MOU) was a contract for the sale of goods

with both exclusivity and requirements terms, the court should have applied the

damage provisions of U.C.C. §§ 1-306, 2-713, and 2-715, and that doing so would




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have enabled GoEco to survive summary judgment. This argument fails for

several reasons.

      First, the MOU is not a contract for the sale of goods and is thus not

governed by the U.C.C. Where “one or more terms are left open,” California will

still recognize contracts for the sale of goods and use gap-filler provisions provided

by Division 2, provided “there is a reasonably certain basis for giving an

appropriate remedy.” Cal. Com. Code § 2204(3). Here, the MOU failed to define

an overwhelming majority of essential terms including the quantity, price, delivery

location, shipping terms, types of goods, and payment terms. Additionally, the

MOU’s express language stated that these terms were to be later negotiated.

(“Facts not referred [to] in this MOU will be negotiated between the parties

separately from this MOU, or by incorporation into a superseding MOU.”) The

MOU memorialized the parties’ relationship but was not itself a U.C.C.-governed

contract.

      Second, the MOU was not a requirements contract. “It is elementary that a

requirements contract is one in which the buyer ‘expressly or implicitly promises

he will obtain his goods or services from the [seller] [e]xclusively.’” Harvey v.

Fearless Farris Wholesale, Inc., 589 F.2d 451, 461 (9th Cir. 1979) (quoting Bank

of Am. Nat’l Trust & Savs. Ass’n v. Smith, 336 F.2d 528, 528 n.1 (9th Cir. 1964)).

As such, requirements agreements impose “an obligation by the seller to use best


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efforts to supply the goods.” Cal. Com. Code § 2306(2). At no point did the MOU

mandate that GoEco obtain the entirety of its LED light supply from Lumens ––

even for declared channel clients –– and nowhere does GoEco show that this term

was implied. As such, the agreement is not a requirements contract and Lumens

was under no obligation to sell products to GoEco.

      Third, the MOU did not contain exclusivity provisions. GoEco argues that

the non-circumvention provision pertaining to declared channel clients was

sufficient to establish exclusivity as to its clients and cites one unpublished case

from the Western District of Virginia for this proposition. Titan Atlas Mfg. Inc. v.

Sisk, Nos. 1:11CV00012, 1:11CV00068, 2011 WL 5041322 (W.D. Va. Oct. 22,

2011). However, extensive research has not revealed any like authority and the

overwhelming majority of cases consider exclusivity provisions to apply only in

the geographic context. As the agreement expressly stated that GoEco was

authorized to seek out new clients on Lumens’s behalf within the “non-exclusive

territory of N[orth] America,” the district court properly concluded the MOU was

non-exclusive.

B. Counterclaims and Affirmative Defenses

      Under California law, a breach of contract action requires that a plaintiff

show: (1) the existence of a contract; (2) plaintiff’s performance; (3) defendant’s

breach; and (4) damage to plaintiff resulting therefrom. McKell v. Wash. Mut.,


                                           5                                    18-55221
Inc., 49 Cal. Rptr. 3d 227, 253 (Ct. App. 2006). The district court properly held

that there was no material dispute as to each of these four elements and Lumens

was entitled to summary judgment.

      Turning to the first element, all transactions between Lumens and GoEco

were governed pursuant to contracts that arose from their course of dealing. The

district court erred when it found that Lumens’s invoices were themselves

contracts, as California does not recognize invoices as contracts, India Paint &

Lacquer Co. v. United Steel Prods. Corp., 267 P.2d 408, 416 (Cal. Dist. Ct. App.

1954) (“The prevailing rule is that an invoice, standing alone, is not a contract.”).

Rather, contracts between the parties were formed when GoEco sent Lumens an

offer, in the form of a purchase order, and Lumens accepted the offer by shipping

the goods. See Cal. Com. Code § 2206(1)(b) (“An order or other offer to buy

goods for prompt or current shipment shall be construed as inviting acceptance

either by a prompt promise to ship or by the prompt or current shipment of

conforming or nonconforming goods.”). The invoices are merely evidence of the

parties’ contract. This does not, however, displace the district court’s analysis

because the first element (the existence of a contract) is clearly met, and this court

may affirm on any basis supported by the record. DeNardo v. Murphy, 781 F.2d

1345, 1347 (9th Cir. 1986).




                                           6                                    18-55221
      Neither party challenges the district court’s holding that the other three

elements for Lumens’s breach of contract claim against GoEco are met. Lumens

simultaneously accepted and performed the individual contracts by shipping

products ordered by GoEco, GoEco failed to pay for these products, and Lumens

subsequently suffered the loss of over $1 million.

      1. Counterclaims

      GoEco counterclaimed that Lumens also breached the parties’ contract and

that it is owed damages on the Specialty Lighting (Specialty), DSL Energy (DSL),

and Juno Lighting Group (Juno) accounts. GoEco also claims that the district

court erred in granting summary judgment in favor of Lumens on GoEco’s

interference tort claim regarding the Topaz relationship.

             i. Specialty

      GoEco makes two claims for prospective lost profits stemming from the

Specialty account. It first argues that it lost $59,729.76 in profit when Lumens

refused to deliver the final two installments of a six-installment light panel order

placed by Specialty unless GoEco paid for the shipments up front. Lumens claims

upfront payment was necessary because GoEco failed to pay for the previous four

shipments. Second, GoEco claims that Specialty’s order history indicates that

GoEco would have profited on future orders.




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      Neither lost profit claim creates a genuine issue of material fact as GoEco

failed to provide the district court with sufficient evidence to calculate its net

profits. A party requesting prospective lost profits “must show loss of net

pecuniary gain, not just loss of gross revenue.” Kids’ Universe v. In2Labs, 116

Cal. Rptr. 2d 158, 169 (Ct. App. 2002). “Net profits are the gains made from sales

after deducting the value of the labor, materials, rents, and all expenses, together

with the interest of the capital employed.” Id. (internal quotations and citations

omitted). Subtracting the projected invoice total from the forward-price (the price

Specialty was to pay GoEco), as GoEco advocates, provides only gross profit. The

district court could find no evidence of GoEco’s net profits and GoEco does not

point this court to relevant evidence on appeal. As such, we affirm the district

court’s grant of summary judgment in favor of Lumens on GoEco’s prospective

lost profit damages regarding Specialty.

             ii. DSL, Juno, and Topaz

      GoEco next argues that a genuine issue of material fact exists on whether it

is entitled to damages stemming from the DSL account. It claims that because of

defective lighting tubes sent by Lumens to DSL, it should be able to recoup

damages for: (1) lost time and effort in addressing the problems; (2) the refund it

paid to DSL as a result of the problems, and related expenses; and (3) expected lost

profits from the DSL account. These claims warranted summary judgment for


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similar reasons as those discussed above; namely, GoEco did not provide specific

information pertaining to the amount of damages it claims and, instead, told the

court that it would provide this information at trial.

      The same analysis applies to GoEco’s claim for punitive damages on the

Juno account as GoEco failed to provide any data supporting its claims for

$250,000 in lost profits. As the only evidence provided by GoEco pertaining to

this claim stems from its principal’s conclusory testimony1 –– which lacked

necessary facts and data –– the district court properly granted summary judgment

in Lumens’s favor.

      GoEco also argues that it is entitled to a trial on its claim for damages due to

Lumens’s interference with its contemplated supplier relationship with Topaz.

After Lumens ceased fulfilling GoEco’s purchase orders, GoEco discussed


1
  Throughout its briefing both on appeal and in the district court, GoEco relies
primarily on the testimony of its two principals, Niki Chae and Darren Bordelon, in
attempting to prove damages. In almost every instance, the principals fail to
provide sufficient information to enable the court to make a reasonable estimation
of damages as required under Federal Rule of Evidence 702. This court recognizes
that a “district court may not disregard a piece of evidence at the summary
judgment stage solely based on its self-serving nature.” Nigro v. Sears, Roebuck &
Co., 784 F.3d 495, 497 (9th Cir. 2015). However, a district court may disregard a
self-serving declaration when, as here, the declaration “states only conclusions and
not facts that would be admissible evidence.” Id. Here, the district court properly
found that both the “Bordelon Report” and “Chae Report” were conclusory in
nature as they failed to provide the necessary facts and data that it required to
calculate damages and thus were insufficient to create a genuine issue of material
fact. See id.


                                           9                                   18-55221
sourcing panels directly from Topaz, the lighting company that manufactured

Lumens’s LED panels, for the Specialty account. However, GoEco admits that it

would not have profited from the proposed relationship on the first few shipments

–– those meant to complete Specialty’s six installment order –– as Topaz would

facilitate the sales directly. GoEco provides no concrete evidence, beyond

conclusions of its principals, that the relationship with Topaz would have

continued and eventually yielded a profit for GoEco. Accordingly, GoEco fails to

show prospective lost profits; summary judgment in favor of Lumens was

warranted and Lumens’s purported conduct is thus inconsequential.

            iii. Investment damages

      GoEco also argues that it is entitled to a trial on lost investment damages.

These damages are also speculative in nature. GoEco does not provide specific

evidence of the cost of the “substantial time, effort, and expense” it incurred in

readying itself to sell Lumens’s products. Moreover, it provides no evidence that

these investments were made at the request of Lumens or pursuant to any

agreement between the parties.

      2. Affirmative Defenses

      GoEco contends that the district court incorrectly disposed of its affirmative

defenses. We disagree. It was incumbent on GoEco to raise these affirmative

defenses in response to Lumens’s motion for partial summary judgment on its


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contract claims and support them with evidence. Of course, GoEco would have the

burden of production and persuasion as to any of its affirmative defenses. Lumens

was not required to negate GoEco’s affirmative defenses. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). Merely citing to the allegations in the pleadings on

appeal is insufficient. There is no error.

      AFFIRMED.




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