Novell's appellate brief filed(Groklaw)

Ah, the Novell appellate brief and the parole evidence rule.

My earlier comments in regard to SCO's appellate brief still apply.

But, what you can understand by reading Novell's brief is that this case depends upon the application of the parole evidence rule.

The APA was and is dependent upon California State law. The contract was drafted and negotiated in California and as I recall it actually states that it should be governed by California law.

In California the parole evidence rule does apply. And you can read this appellate brief for an explanation of this rule. Basically it says that parole evidence (oral testimony) can not be used to change the terms of a written agreement. Of course this is explained in several ways. And I do not need to repeat what the appellate brief lays out.

What the appellate brief does not explain is why the parole evidence rule is present in California law.

First I should point out that not all jurisdictions (States) have such a law or have adopted it in the same way.

But, here is the problem. You have a contract signed by two parties. And after that event, one party or the other either has a change of heart or simply a bad memory. Or, as is often the case, simply did not understand what the contract did.

In this case, you have the situation where the original parties to the contract are no longer around. Novell is but Santa Cruz Operation is gone. Much of what the OldSCO had was transferred to Caldera (later to take the name of SCO here). And some was even held over and finally sold to SUN (and almost passed on to IBM).

But the problem is that no one at NewSCO(Caldera) was involved in even the negotiation of the original APA. So clearly they are not the best witnesses to testify as to what the APA is supposed to do. At the time of the APA, Caldera was an outside party. A “nobody” if you will.

Now the parole evidence rule simply states that oral testimony (from anybody much less non affected third parties) can not be used to change or alter the terms of a written contract. In other words, the court will simply not admit any testimony that might be offered in that regard. And it does so as a matter of law.

Now, if you have been following this case, you do know that Judge Kimball did in fact expose himself to testimony offered by several people. And, in fact, even these appellate briefs refer to some of that offered testimony. Even the Novell brief here makes notice of the fact that OldSCO's counsel at the time could not offer any definitive testimony that the copyrights were transferred.

But, if that kind of evidence is not acceptable, why is it even mentioned here?

That is a good question.

And it helps to understand what some other jurisdictions do when they do not have the parole evidence rule. And many do not.

Normally, a jury or a judge sitting at trial will ascertain the credibility of the witnesses. So in jurisdictions were the rule does not apply, a judge or jury would listen to the testimony of these third parties and decide if and when such testimony could possibly change the affect of a written contract.

Does this mean this case could have a different outcome had the contract been subject to New York or Utah state law? Well, I do not know if either Utah or New York state has adopted the parole evidence rule or not. But, either way the outcome in this case would likely have been the same.

The problem here is the credibility of testimony coming from those not directly involved in the negotiation or even true third parties. I mean if you are going to listen to some third party you might as well parade members of the trade press and have them testify as to what they think the deal was. And notice that I said “what the deal was” rather than “what the contract says”. Clearly members of the trade press (and perhaps bloggers if you want to be fair) are the last persons qualified to interpret what a contract means. And clearly almost all judges (and lawyers) think of themselves to be quite qualified to interpret a contract.

So clearly these outside people are not the best witnesses for something they had nothing to do with. And that even applies to lawyers (all of them) and judges (all of them except for the judge sitting on a particular case).

The problem is a real one.

Outside people simply do not make the best witnesses. And, courts know that these outside people (or people that may buy into a contract) may have an agenda in mind that clearly contradicts what the original parties to an agreement might have had in mind.

People forget. People do not understand in the first place. And, as can be clearly understood in the SCO case, people can change their mind. The contract as signed by OldSCO was just fine with them. They even put Caldera lawyers and company on notice that the chain of title for the copyrights was not available. Yet, Caldera turned SCO decides to try to rewrite the original APA and amendments so that it has a lot more than it bought.

This case is a very good case to illustrate why the parole evidence rule exists. And it explains why judges much prefer to read the contract themselves to ascertain what went down rather than listen to some idiots blabber about how things might be different if the agreement were otherwise.

So California has adopted the parole evidence rule. And simply put you can not use oral testimony to change the terms of a contract. The court simply refuses to listen to that crap.

Yes, there are exceptions. If the contract is ambiguous then perhaps things might be different. But, in this case, Judge Kimball decided that the contract was sufficiently clear for his purposes. And this is so even though he has been exposed to the testimony to be offered orally by SCO.

But, what happens in those jurisdictions that do not have the parole evidence rule?

Most likely the issue would not have been resolved in summary judgment as it was here. Judges in summary judgment do not weight the credibility of witnesses. As you should understand by now, in summary judgment the decision is only whether or not sufficient evidence is presented that if believed by a jury or judge would support the position of the party opposing a motion for summary judgment. And in many cases, even if a judge decides that one side or the other is only proposing to put up crap, a trial may nevertheless by scheduled. (In this case, a trial did take place by the only issue was the amount of money to be owed to Novell and not the terms of the APA or whether or not the copyrights transferred.)

So would the outcome be different if the APA were interpreted by some other laws?

My guess is no.

You can look at the credibility of the witnesses and the fact that SCO did not even put forward any evidence by those directly involved in the negotiation of the APA that suggests the copyrights transferred. Even Judge Kimball noticed that absence in his summary judgment decision. And you can bet the appellate court will also notice that absence. Most likely they will say nothing about it in their final decision (but even they may make mention of it).

My guess is that the appellate court will be asking itself “Why is this case even on their calendar?”. Just like anyone else they do not desire to waste their time clearing cases that are not worth their efforts. The appellate court has to spend a considerable amount of time reading up on this case and looking for the reason they have been called to action. When finished with their first read, if they think to themselves “Why is this case here?”, SCO is toast. They are not even a California court. So they are very unlikely to attempt to change California law. Even if they thought it was called for.

So if the APA was judged according to the laws of a State not adopting the parole evidence rule, it is possible that this issue would have survived summary judgment and made it all the way to trial (judge or jury). But, even in that situation, the credibility of witnesses put up by SCO is pretty weak. Where did the lawyers for SCO go? You know, the lawyers that negotiated the APA and amendment? The witnesses that could (if they existed) claim that their understanding of the APA is consistent with the meaning that SCO wants. And even if those lawyers could show up and say this or that, the court may decide that they were clearly incompetent as lawyers having drafted a document that fails to confirm the meaning they now claim the deal had. I am sure you can find plenty of cases where the lawyers have to admit to the court that they screwed up in drafting the documents thus the written record does not reflect the actual agreement. Simply put, there are reasons why the boiler plate often reads such that the entire agreement is contained in the writing. Hint: It makes the other lawyers look silly when they try to pull an SCO. And in this case, you have NewSCO trying to change the agreement signed and negotiated by OldSCO. What a stretch. And you have the notice from OldSCO to NewSCO that the chain of title for the copyrights is missing in action. Missing because nobody claims it ever existed.

This is not a case where SCO loses because of a “technicality” or “special strange rule” found only in California. Although I would not be surprised to hear someone from SCO claiming such.

In California, the parole evidence rule is in place for very good reasons. And even in those jurisdictions where that rule does not exist judges are very careful about accepting oral testimony intended to change a written document. It is a high bar. And no doubt many jurisdictions have stopped short of adopting such a rule simply because they know they can cut off these kinds of attempts at trial (if not summary judgment). A judge can always decide that the evidence offered at summary judgment is simply insufficient to require the issue to be decided at a trial before a judge or jury.

In summary, SCO lawyers knew for a fact that they were cooked if this case ever makes it to trial or an appeal. The parole evidence rule is not controversial at all. And even in those jurisdictions were it is not adopted the outcomes are much the same.

You will note in the Novell appeal that mention is made of the fact that Novell tried to get the SCO action dismissed early on. If that had been the result none of this would have occurred. But, SCO objected to the dismissal insisting that the case move forward and now you can see it is SCO owing millions to Novell and having the court decide properly that SCO can not sustain its action against IBM, defend its case against Red Hat and possibly lose out against AutoZone? as well.

What is that old advice? Be careful what you ask for? You might get it. SCO brought this upon themselves through their ignorance and stupidity. Or, greed if you want to put it that way.

Never say never when it comes to an appeal. But, I do think the appellate court is going to be asking itself “Why is this case even here?”. Being a judge at any level is never easy. But, they all want to think that the cases they do hear are called for under the circumstances. All too often that is simply not the case.