Tower Acton Holdings, LLC v. Los Angeles County Waterworks District No. 37

129 Cal. Rptr. 2d 640 (2002)

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Tower Acton Holdings, LLC v. Los Angeles County Waterworks District No. 37

California Court of Appeal
129 Cal. Rptr. 2d 640 (2002)

Facts

Tower Acton Holdings, LLC (Acton) (plaintiff) contracted with the Los Angeles County Waterworks District (the district) (defendant) for the purpose of creating a water system. Acton sought to recoup some of the project’s cost through a reimbursement agreement with the district. The parties then entered a confidentiality agreement, which provided that no information derived from the negotiations surrounding the reimbursement agreement could be used in subsequent litigation. The confidentiality agreement was to be effective until either party terminated it in writing. The district refused to agree to Acton’s reimbursement terms, asserting it could not do so under the Public Contract Code. Acton notified the district of its intent to file a claim but continued to try to resolve the dispute without litigation. Eventually, Acton brought an action for breach of contract and breach of the implied covenant of good faith and fair dealing and sought to admit the evidence of the negotiations. The trial court found that the confidentiality agreement terminated when Acton filed its complaint, and the court allowed evidence of negotiations that occurred after that date. The jury awarded Acton $10,000,000 in a nine-to-three decision. The district appealed, claiming that the trial court erred in admitting evidence of the parties’ settlement negotiations. Acton maintained that this evidence was admissible because it was offered to prove the district’s bad faith, not its liability.

Rule of Law

Issue

Holding and Reasoning (Croskey, J.)

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