Interstate Specialty Marketing, Inc. v. ICRA Sapphire, Inc.

Interstate Specialty Marketing, Inc. (Interstate) (plaintiff) contracted with ICRA Sapphire, Inc. (Sapphire) (defendant) to convert a computer-software application. Sapphire did not complete the conversion, and Interstate sued Sapphire for breach of contract. Interstate attached a November 14 or 15, 2002 letter to the complaint and alleged that it was a true and correct copy of the parties’ agreement. Sapphire filed a cross-complaint and attached the actual contract, dated November 26, 2002. However, Sapphire did not tell Interstate that the document attached to Interstate’s complaint was not the actual agreement. Instead, on March 22, 2012, Sapphire filed a summary-judgment motion based on Interstate’s reliance on the wrong document. On June 5, 2012, Interstate moved to amend its complaint to include the actual agreement. The trial court granted Interstate’s motion to amend and denied Sapphire’s motion for summary judgment. However, on its own motion, the trial court also set an order-to-show-cause hearing about possibly sanctioning Interstate for not attaching the correct agreement to the original complaint. Sapphire requested approximately $5,000 as reimbursement for fees it had spent to bring the summary-judgment motion based on Interstate’s mistake. The trial court awarded the fees to Sapphire as a sanction against Interstate under California Code of Civil Procedure § 128.7. Interstate appealed.