Ten-X v. Lutsch CA4/3

Filed 11/9/26 Ten-X v. Lutsch CA4/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE TEN-X, LLC, Plaintiff and Respondent, G064615 v. (Super. Ct. No. 30-2021- 01231127) CODY LUTSCH et al., Defendants and Appellants. TEN-X, LLC, Plaintiff and Appellant, G064714 & G065240 v. CODY LUTSCH et al., OPINION Defendants and Appellants; FAT PROPERTY, LLC, Defendant and Respondent.  Appeals from judgments and postjudgment order of the Superior Court of Orange County, Robert Shawn Nelson, Judge. Affirmed in part, reversed in part, and remanded with directions. Request for Judicial Notice. Denied. Fennemore, Robert P. Allenby and Shannon D. Sweeney for Defendants and Appellants Cody Lutsch and Lemmings, LLC. Call & Jensen, David R. Sugden, Aaron L. Renfro and L. Lisa Sandoval for Plaintiff and Appellant Ten-X, LLC. Fennemore, Robert P. Allenby and Shannon D. Sweeney for Defendant and Respondent Fat Property, LLC. * * * Plaintiff Ten-X, LLC (Ten-X) filed this action against defendants Cody Lutsch, Lemmings, LLC (Lemmings), and Fat Property, LLC (Fat Property) (collectively, Defendants). Lutsch is the sole owner of Lemmings, which owned a commercial property in Houston (the Property). Lutsch also owns Fat Property, a property management company. Ten-X is an online auction platform for the sale of commercial properties. In 2021, Lemmings entered into an agreement with Ten-X to sell the Property at auction (the Marketing Agreement), which, among other things, prohibited the seller or any of its members and managers from bidding on the Property. Lutsch, however, wanted to increase the auction price, so he used the fictitious persona of “Scott Max” to bid on the Property. While pretending to be Scott Max, he agreed to abide by Ten-X’s standard participation terms that governed bidders in its auctions (the Participation Terms); he also submitted a fabricated Scott Max bank record to satisfy Ten-X’s requirement that prospective bidders provide proof of funds. Having qualified to participate in the auction, Lutsch (as Scott Max) submitted multiple bids. When it became 2 apparent he was the highest bidder, Scott Max went silent; he stopped communicating with Ten-X, and the sale was not consummated. The case proceeded to a jury trial. The trial court granted Fat Property’s motion for nonsuit, and the jury rendered a verdict in favor of Ten- X against Lutsch and Lemmings on various legal theories. The court entered judgment on the verdict, awarding $79,900 against Lemmings for breach of the Marketing Agreement and $51,000 against Lutsch for breach of the Participation Terms; $73,500 against Lemmings and Lutsch for breach of the covenant of good faith and fair dealing and on Ten-X’s two fraud claims; $10,000 against Lemmings on the common count of quantum meruit; and punitive damages of $1,000,000 against Lemmings and $5,400,000 against Lutsch. On August 2, 2024, the court denied Lutsch and Lemmings’s motions for judgment notwithstanding the verdict (JNOV) and for a new trial or remittitur, except that, with respect to the punitive damages award against Lutsch, the court agreed to order a new trial if Ten-X did not accept a remittitur of the punitive damages against Lutsch to $1,790,000. Ten-X accepted the remittitur, and the court subsequently entered an amended judgment. That was followed by a second amended judgment entered at Ten- X’s request to correct the amount of the remittitur and some other aspects of the judgment not at issue here. Lutsch and Lemmings appealed, as did Ten-X.1 We affirm the second amended judgment in part and reverse in part. We conclude the trial court erred in several respects. First, it erred by denying JNOV on Ten-X’s 1 Separate appeals were taken from the initial judgment, the amended judgment, and the second amended judgment, which correspond to the three separate appeals consolidated in this proceeding, as discussed further below. 3 fraud claims and, because there is no basis for punitive damages absent the fraud claims, by denying JNOV on punitive damages. Second, because Ten- X’s claim for breach of the implied covenant of good faith and fair dealing is superfluous (in that it is duplicative of the breach of contract claim) it was error to deny JNOV as to it. Third, judgment must be reversed on the award on the common count for quantum meruit. We find no basis to disturb the judgment on the remaining claims. Accordingly, Ten-X remains entitled to recover $79,900 against Lemmings for breach of the Marketing Agreement and $51,000 against Lutsch for breach of the Participation Terms. Finally, we conclude the trial court did not err in granting nonsuit as to Fat Property. Thus, the August 2, 2024 order (as corrected nunc pro tunc) and the second amended judgment are affirmed in part and reversed in part, and the matter is remanded to the trial court with directions to enter an amended judgment consistent with this opinion. FACTUAL AND PROCEDURAL BACKGROUND I. THE COMPLAINT In November 2021, Ten-X filed its complaint against Defendants.2 The complaint asserted five causes of action: (1) breach of written contract against Lemmings and Lutsch3; (2) breach of the implied 2 Thomas Brame Wilkinson, IV also was named as a defendant but was dismissed prior to trial. He is not a party to this appeal. 3 In the complaint, the heading of the first cause of action, for breach of contract, stated it was against “All Defendants Lemmings, Lutsch, and Does 1 through 10.” (Boldface omitted.) On this consolidated appeal, Ten- X states its sole claim against Fat Property was the fifth cause of action for fraud and asserts the trial court erred in granting nonsuit on that fraud claim as to Fat Property. Accordingly, we need not—and do not—decide in 4 covenant of good faith and fair dealing against Lemmings and Lutsch; (3) common counts against Lemmings and Lutsch; (4) promissory fraud against Lemmings and Lutsch; and (5) fraud against all Defendants. The complaint also attached two written agreements: the Marketing Agreement and the Participation Terms. II. TRIAL A. Evidence During Phase 1 Trial of the action was bifurcated. Trial of the first phase, on liability and compensatory damages, began in April 2024. During that phase, multiple witnesses testified, including Lutsch, four current employees of Ten- X, and a former Tex-X employee. The evidence showed, among other things, the following: Lemmings purchased the Property in 2017 for approximately $2,900,000. Lutsch is a real estate investor and is the manager and sole owner of Lemmings. He also is the president and owner of Fat Property, a property management company that provided management services to the Property. After a tenant at the Property vacated the premises, Lutsch began looking to sell the Property, and he eventually discussed with Ten-X the prospect of selling it at auction. Ten-X conducts online auctions of commercial real estate. In exchange for a transaction fee (which is an amount paid by the property buyer over and above the purchase price), Ten-X creates a listing on its website, markets the property, conducts the auction, and facilitates finalizing the sale to the successful bidder. this opinion whether the first cause of action in the complaint was also asserted against Fat Property. 5  On March 25, 2021, Lemmings entered into the Marketing Agreement with Ten-X regarding the auction of the Property. Lutsch signed the Marketing Agreement on behalf of Lemmings. The Marketing Agreement listed the reserve price as $1,500,000, which is the minimum price at which the Property could sell at the auction. It also specified how the transaction fee would be calculated. For example, if the buyer’s offer price was $1,000,000 to $2,999,999, the transaction fee would be 3 percent of that price. The Marketing Agreement also provided for a withdrawal fee in the event the property owner withdrew the property from the auction. The withdrawal fee was “[a]n amount equal to the Transaction Fee that would be applicable to a sale at the Initial Reserve Price.”4 The Marketing Agreement also incorporated what it referred to as Ten-X’s Marketing Agreement standard terms. Among other things, the standard terms provided: “Neither Seller nor any of its affiliates, nor any of their respective directors, members, managers, officers, partners, employees, representatives or agents, shall enter any offer or bid for a Property on behalf of Seller. Seller authorizes Ten-X to enter bids on behalf of Seller up to the Reserve Price, unless otherwise prohibited by law.” The standard terms also provided: “In no event shall any partner, member, shareholder, manager, director, officer, agent, employee, representative or affiliate of any party have any personal liability in connection with the Agreement. Despite anything to the contrary in the Agreement or these Standard Terms, under no 4 If the seller withdrew the property more than 30 days before the start of the first scheduled auction date, then only 50 percent of the withdrawal fee would be due. Additionally, “[i]f the highest offer for the Property is at or above the Reserve Price and Seller rejects it, Seller shall immediately pay Ten-X the Transaction Fee based on that offer.” 6 circumstances shall any party hereto be liable to the other for, and each party waives any and all rights to claim against the other for, any special, indirect, incidental, consequential, punitive or exemplary damages in connection with the Agreement or any services performed under the Agreement, including, but not limited to, lost profits, even if such party has knowledge of the possibility of such damages.” To participate in a Ten-X auction, a bidder must first register to bid on the Ten-X auction platform. That required a prospective bidder to not only agree to abide by Ten-X’s Participation Terms but also to provide additional information, including proof of funds. One of the eventual bidders on the Property was named “Scott Max,” which, unbeknownst to Ten-X at the time, was a fictitious name and actually was Lutsch. Scott Max (i.e., Lutsch) agreed to Ten-X’s Participation Terms on February 21, 2021. Among other things, the Participation Terms provided that all offers are irrevocable (except where an offer withdrawal option is expressly made available), and a “Winning Buyer must sign the Purchase Documents within two hours after they are sent to Winning Buyer (unless a longer timeframe is specified in writing by Ten-X).” The Participation Terms also contained a liquidated damages provision. For proof of funds, Scott Max submitted a document that purported to be one of his bank records. In fact, however, the bank record was a fake: it was actually a bank record for Fat Property that Lutsch had altered to make it appear to be an account document for Scott Max. Among other things, Lutsch altered the document to show a fictitious account balance of more than $3,000,000. In an email to a friend almost two months before the auction took place, Lutsch explained that he intended to bid on his own property “to get it 7 up to where [he would] be happy to sell.” Lutsch indicated that, if he was the highest bidder, he would simply “ghost” Ten-X. And that is precisely what happened. The auction for the Property began on June 1 and ended on June 3, 2021. There were multiple bidders, including multiple bids from Lutsch, posing as Scott Max. Scott Max eventually won the auction with a bid of $2,550,000. The next highest bidder was at $2,425,000. When Lutsch learned his self-bid as Scott Max was the highest bid, Scott Max stopped communicating with Ten-X. And when Ten-X sent a contract package to Scott Max to finalize the sale, Lutsch did not respond. This prompted Ten-X to conduct an investigation. Upon further review of Scott Max’s proof of funds document within a few days after the auction, Ten-X discovered an apparent reference to Fat Property, which it recognized as one of Lutsch’s businesses. Ten-X then sent Lutsch an invoice, addressed to Lemmings, for $79,900, which consisted of a transaction fee of $76,500 (3 percent of $2,550,000) plus $3,400 for reimbursement for the cost of two property reports (an environmental site assessment and a property condition assessment) that Ten-X had obtained from third parties. Lutsch did not pay it. In October 2022, Lutsch sold the Property for $3,300,000. Between the date of the auction and the date on which he sold the Property, Lutsch collected rent of more than $300,000 from a tenant at the Property. B. Defendants’ Motion for Nonsuit After Ten-X rested its case at trial, Defendants moved for a nonsuit. Among other things, they argued (1) there was no evidence Ten-X suffered any independent harm on the fraud claims that was separate from the harm it suffered for breach of contract, (2) the claim for breach of the implied covenant of good faith and fair dealing was duplicative of the breach 8 of contract claim, and (3) there was no evidence Fat Property was a proper defendant. The trial court granted the motion only as to Fat Property and otherwise denied it. C. Jury Verdict for Phase 1 On May 1, 2024, the jury, using the parties’ jointly submitted special verdict forms, made findings in favor of Ten-X on its claims. On the breach of contract cause of action, the jury awarded $79,900 against Lemmings and $51,000 against Lutsch. On the cause of action for breach of the implied covenant of good faith and fair dealing, the jury awarded $73,500. On the common counts cause of action, the jury found the reasonable value of the services provided to Lutsch and/or Lemmings was $10,000. On the intentional misrepresentation cause of action, the jury awarded $73,500. On the promissory fraud cause of action, the jury also awarded $73,500. The jury also found Lemmings and Lutsch acted with malice, oppression, or fraud. Additionally, on a “special verdict form for damages on multiple legal theories” (capitalization and boldface omitted), the jury entered the total amount for which Lutsch and Lemmings each was liable to Ten-X for “breach of contract, breach of the implied covenant of good faith and fair dealing, common counts for services rendered, promissory fraud, or fraud”: the total was $124,500 for Lutsch and $163,400 for Lemmings. D. Phase 2 During the second phase of the trial relating to the amount of punitive damages, only two witnesses testified: Lutsch and an expert for Ten- X. The expert testified Lutsch’s current net worth was around $64,000,000. The jury awarded punitive damages of $5,400,000 against Lutsch and $1,000,000 against Lemmings. On May 22, 2024, the trial court entered judgment. 9  III. POSTJUDGMENT MOTIONS, AMENDED JUDGMENTS, AND APPEALS In June 2024, Lutsch and Lemmings moved for JNOV or, alternatively, a new trial/remittitur. Ten-X opposed, and the parties submitted additional filings related to the motions. On August 2, 2024, the trial court held a hearing and ruled on the motions. It denied the motions, except for the request for a remittitur regarding the punitive damages award against Lutsch. On that issue, the court ordered that Ten-X had 30 days to accept the remittitur of the punitive damages against Lutsch to $1,790,000 or a new trial would be ordered.5 On August 30, 2024, Ten-X filed its notice of acceptance of the remittitur of the punitive damages against Lutsch to $1,790,000. On September 3, 2024, Lutsch and Lemmings filed a single notice of appeal (No. G064615). It stated they both appealed from the May 22, 2024 judgment; Lemmings also appealed from the order denying its motion for JNOV; and Lutsch also appealed from the order granting his motion for new trial/remittitur regarding punitive damages and denying his motion for JNOV. On September 19, 2024, the trial court entered the amended judgment. On September 27, 2024, Ten-X filed a notice of appeal, indicating it appealed from the September 19, 2024 amended judgment and the order granting Lutsch’s motion for JNOV and/or remittitur on punitive damages 5 The trial court subsequently issued a minute order on August 7, 2024, that corrected nunc pro tunc the August 2, 2024 order; it also issued an order on August 8, 2024, that made a further nunc pro tunc correction to the August 7, 2024 order to note a signed transcript of the hearing would be incorporated as the court’s statement of reasons. 10 that had been corrected nunc pro tunc (No. G064714). On October 1, 2024, Lutsch and Lemmings filed a notice of cross-appeal, indicating they appealed from the September 19, 2024 amended judgment. Their notice of cross-appeal also stated Lemmings appealed from the order denying its motion for JNOV and Lutsch appealed from the order granting his motion for new trial/remittitur on punitive damages and denying his motion for JNOV. On February 3, 2025, after additional filings by the parties related to a proposed second amended judgment sought by Ten-X, the trial court entered the second amended judgment. On February 21, 2025, Lutsch and Lemmings filed a notice of appeal indicating they appealed from the February 3, 2025 second amended judgment (No. G065240). That notice of appeal again stated Lemmings appealed from the order denying its motion for JNOV and Lutsch appealed from the order granting his motion for new trial/remittitur on punitive damages and denying his motion for JNOV. Also on February 21, 2025, Ten-X filed a notice of cross-appeal indicating it was appealing from the February 3, 2025 second amended judgment and stating that, by doing so, it also appealed from all prior orders and rulings, including the order granting Lutsch’s motion for JNOV and/or remittitur on punitive damages.6 This court consolidated all three appeals.7 6 On August 8, 2025, Lutsch and Lemmings filed a request for judicial notice of three documents they contend relate to their “partial satisfaction of the jury’s verdicts.” The request for judicial notice is denied as those documents are unnecessary to the resolution of this appeal. (See County of San Deigo v. State of California (2008) 164 Cal.App.4th 580, 613, fn. 29.) 7 There is a separate appeal regarding attorney fees (No. G065826), which was stayed pending resolution of this consolidated appeal. This opinion does not address No. G065826. 11  DISCUSSION I. FRAUD CLAIMS A. JNOV Standard “‘A trial court must render judgment notwithstanding the verdict whenever a motion for a directed verdict for the aggrieved party should have been granted. [Citation.] A motion for judgment notwithstanding the verdict may be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support. [Citation.] [¶] The moving party may appeal from the judgment or from the order denying the motion for judgment notwithstanding the verdict, or both. [Citation.] As in the trial court, the standard of review is whether any substantial evidence—contradicted or uncontradicted—supports the jury’s conclusion.’ [Citation.] However, to the extent a motion for judgment notwithstanding the verdict raises legal issues such as the application of law to undisputed facts or the interpretation of a statute or contract, we review the trial court’s ruling on the motion de novo.” (Brown v. City of Sacramento (2019) 37 Cal.App.5th 587, 597–598.) B. The Economic Loss Rule and Independent Tort Principles “The economic loss rule is a device, among others, that courts have developed to address and protect the often elusive boundary line between tort and contract law.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 19 (Rattagan).) “‘Whereas contract actions are created to enforce the intentions of the parties to the agreement, tort law is primarily designed to vindicate “social policy.”’” (Ibid.) “As a result of this distinction between contract and tort claims, parties injured solely by a contractual breach have a narrower set of remedies 12 compared to those available to litigants who suffered tortious injury. ‘Contract damages are generally limited to those within the contemplation of the parties when the contract was entered into or at least reasonably foreseeable by them at that time; consequential damages beyond the expectations of the parties are not recoverable. [Citations.] This limitation on available damages serves to encourage contractual relations and commercial activity by enabling parties to estimate in advance the financial risks of their enterprise.’” (Rattagan, supra, 17 Cal.5th at pp. 19–20.) “Civil Code section 3333 further provides: ‘For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.’ . . . Thus, emotional distress damages are awarded under appropriate circumstances in tort actions but generally are not available in contract actions. [Citations.] Additionally, exemplary or punitive damages may be awarded in a tort action if by clear and convincing evidence the tortfeasor is shown to have acted with ‘oppression, fraud, or malice.’ [Citation.] But ‘punitive damages “‘are never recoverable for breach of contract, no matter how willful or malicious, except where the wrongful act is also a tort.’”’” (Rattagan, supra, 17 Cal.5th at p. 20.) “Given the tension created by the policy of assuring predictability in contractual relations and the expansive scope of potential tort recovery, the economic loss rule was developed to ensure that the law of contract would not ‘drown in a sea of tort.’ [Citation.] ‘The rule itself is deceptively easy to state: In general, there is no recovery in tort for negligently inflicted “purely economic losses,” meaning financial harm unaccompanied by physical or property damage.’ [Citation.] Or, as [Robinson Helicopter Co., Inc. v. Dana 13 Corp. (2004) 34 Cal.4th 979] phrased the rule: ‘[t]he economic loss rule requires a [contractual party] to recover in contract for purely economic loss due to disappointed expectations, unless [the party] can demonstrate harm above and beyond a broken contractual promise.’” (Rattagan, supra, 17 Cal.5th at p. 20.) “[T]he economic loss rule does not act as an absolute bar to tort recovery in every case in which the parties have a contractual relationship. Courts generally permit tort suits if the defendant allegedly violated a duty rooted in tort principles that is independent of the parties’ contractual rights and obligations and exposed the plaintiff to a risk of harm beyond the parties’ reasonable contemplation when they entered into the contract. The ability to recover for an independent tort is a fundamental principle that our courts have broadly applied even where the economic loss rule is not directly implicated.” (Rattagan, supra, 17 Cal.5th at p. 23, fn. omitted.) Rattagan recognized that “[w]hether the alleged harm arises independently from the contract can be a nuanced question.” (Id. at p. 26.) “When evaluating whether the parties’ expectations and risk allocations bar tort recovery, the court must consider the alleged facts. First, applying standard contract principles, it must ascertain the full scope of the parties’ contractual agreement, including the rights created or reserved, the obligations assumed or declined, and the provided remedies for breach. Second, it must determine whether there is an independent tort duty to refrain from the alleged conduct. Third, if an independent duty exists, the court must consider whether the plaintiff can establish all elements of the tort independently of the rights and duties assumed by the parties under the 14 contract.” (Rattagan, supra, 17 Cal.5th at p. 26.)8 “If all the defendant has allegedly done is violate the terms of the parties’ contract, depriving the plaintiff of the benefits the contract ensures, the defendant’s liability is limited by the contract. Broader tort liability only arises if a defendant violates an independent legal duty and the type of harm that ensues was not reasonably contemplated or accounted for by the contractual parties.” (Rattagan, at p. 37.) In Rattagan, the California Supreme Court addressed a question that had been posed by the Ninth Circuit: “‘Under California law, are claims for fraudulent concealment [as opposed to affirmative deception] exempted from the economic loss rule?’” (Rattagan, supra, 17 Cal.5th at p. 38.) Our Supreme Court stated the answer was yes because “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud. The doctrine only applies to bar tort recovery for negligently inflicted economic losses unaccompanied by physical or property damage under the limits 8 The California Supreme Court added, “[a]n important part of this inquiry is determining whether the aggrieved party was exposed to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. An unanticipated harm may result from the breach of an independent tort duty. If, however, the harm was anticipated and the risk allocated, the conduct causing it would not support an independent tort claim.” (Rattagan, supra, 17 Cal.5th at p. 26, fn. 7.) It also noted, “[t]he guiding and distinguishing principle is this. If the alleged breach is based on a failure to perform as the contract provides, and the parties reasonably anticipated and allocated the risks associated with the breach, the cause of action will generally sound only in contract because a breach deprives an injured party of a benefit it bargained for. However, if the contract reveals the consequences were not reasonably contemplated when the contract was entered and the duty to avoid causing such a harm has an independent statutory or public policy basis, exclusive of the contract, tort liability may lie.” (Id. at p. 27.) 15 recognized in” Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905. (Rattagan, at p. 38.) Our Supreme Court, however, noted that this conclusion did not “provide the dispositive answer the Ninth Circuit has requested,” and thus, it reframed the question as: “Can a plaintiff assert an independent claim of fraudulent concealment in the performance of a contract?” (Ibid.) Our Supreme Court answered that question with a qualified yes, holding that “[a] plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties’ contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.” (Ibid.) Our Supreme Court further explained: “A case in which the plaintiff sues a contractual party for fraud based on conduct committed during the course of a contractual relationship falls outside the economic loss doctrine. As we explained in [Robinson Helicopter Co., Inc. v. Dana Corp., supra, 34 Cal.4th 979], ‘[d]ealing with affirmative acts of fraud and misrepresentation raises different policy concerns than those raised by negligence or strict liability claims.’ [Citation.] California public policy strongly supports imposing a tort duty on contractual parties to refrain from fraudulent deceit and favors enforcement of valid fraud actions, which the Legislature has facilitated through the enactment of the general fraud statute. Thus, the analysis focuses on whether the plaintiff can establish the elements of the cause of action independently of the parties’ contractual rights and obligations. In other words, the question will turn on the nature of the alleged conduct, the provisions of the contract itself, and whether the conduct exposed a party to a risk of harm neither reasonably contemplated 16 nor allocated by the parties before entering their agreement. Parties generally do not enter a contract expecting that its terms will be intentionally ignored. However, to assure greater certainty between themselves, they may choose at the outset to contractually guard against certain risks by imposing specific obligations on the other party and allocate their agreed-upon remedies should a breach occur. Among other reasons, they may choose to provide for how violations will be treated, to provide greater deterrence for some kinds of violations, or to eliminate the need to litigate regardless of whether the breach was intentional or negligent. The freedom to do so, however, is limited to agreements that do not violate public policy.” (Rattagan, supra, 17 Cal.5th at p. 44.) Here, Defendants argue Ten-X’s fraud claims are barred by the economic loss rule and Ten-X failed to present evidence “that any misrepresentation or trickery caused any harm cognizable in tort to Ten-X separate and apart from the contractual breach (i.e. failure to pay the transaction fee on the [Marketing] Agreement, and the failure to pay liquidated damages on the Participation [Terms]).” We conclude Ten-X did not prove an independent fraud claim, and the trial court therefore erred by not granting JNOV as to the fraud claims. As an initial matter, Ten-X argues defendants waived their argument regarding the economic loss rule by failing to assert it in their answer and raising it for the first time on appeal. Even if defendants were required to assert the economic loss rule in their answer, we conclude they sufficiently did so in their amended answer, which listed the economic loss doctrine as an affirmative defense. Moreover, Lemmings and Lutsch argued as part of both their motion for nonsuit and their motion for JNOV that Ten- 17 X had failed to present evidence of independent harm in connection with the fraud claims. We do not find the argument waived. Ten-X also asserts “the economic loss rules only apply to the recovery of a plaintiff in a strict products liability tort action.” Ten-X is incorrect. (See Rattagan, supra, 17 Cal.5th at p. 23 [“courts have gone on to apply the economic loss rule in a broad range of contractual situations”].) As discussed above, our Supreme Court’s recent decision in Rattagan extensively discussed the economic loss rule and independent tort principles. Ten-X’s appellate briefing, however, does not cite, and therefore does not raise any arguments specifically based on either Rattagan, supra, 17 Cal.5th 1, or Robinson Helicopter Co., Inc. v. Dana Corp., supra, 34 Cal.4th 979. Ten-X’s fraud claims fail because Ten-X failed to show Lutsch’s and Lemmings’s fraudulent conduct caused it to suffer any harm independent of the breach of the rights and duties of the Marketing Agreement and the Participation Terms. (See Rattagan, supra, 17 Cal.5th at p. 38 [noting third step requires the court to “determine whether the plaintiff can establish all elements of the tort independent of the rights and duties assumed by the parties under the contract”]; see also id. at p. 37 [“[b]roader tort liability only arises if a defendant violates an independent legal duty and the type of harm that ensues was not reasonably contemplated or accounted for by the contractual parties”].) On appeal, Ten-X argues its fraud damages were reputational harm, the costs it incurred to investigate the bogus bid and prosecute this case, and the marketing costs it incurred in connection with 18 the auction of the Property. None of these arguments supports an independent tort here.9 The testimony Ten-X suffered harm to its reputation as a result of the actions by Lutsch and Lemmings was entirely speculative and does not constitute substantial evidence of cognizable reputation damage. At most, Ten-X presented testimony concerning the importance to Ten-X of its reputation and its ability to conduct trustworthy auctions, and how Ten-X’s reputation could be negatively impacted by the kind of conduct Lutsch and Lemmings engaged in.10 But that testimony does not demonstrate Ten-X 9 Ten-X also argues Lutsch and Lemmings raised for the first time on appeal a lack of causation and damages. As discussed above, they argued in the trial court that Ten-X had failed to present evidence of independent harm in connection with the fraud claims. Moreover, an appellant “may raise its sufficiency of the evidence argument for the first time on appeal.” (See Kaushansky v. Stonecroft Attorneys, APC (2025) 109 Cal.App.5th 788, 798.) 10 For example, a Ten-X employee testified that, if a buyer wins an auction but does not close the deal, “it hurts . . . our reputation. So if we have buyers bidding on assets and they don’t honor their bids, then the sellers will be upset with us because the bidders that participated in the event, in their opinion, weren’t real bidders. So it usually hurts us from doing ongoing business with those sellers. [¶] And then from the buyers’ side of the table, when buyers hear the broker call them after the auction and say, you know, the winning bidder didn’t perform. Do you want to buy the property, it dissuades them from participating in future auction events. Because they now know that there’s the opportunity that the properties selling on Ten-X are no longer selling on Ten-X and they have the opportunity to buy them after the auction. So then it deters them from participating in future auction events.” That Ten-X employee also added, “it damages our reputation if we’re showing things as sold in auction and they’re not actually sold in auction,” and “if Ten-X is known for the platform that has fraudulent buyers or shaky buyers, then sellers are no longer going to want to auction their properties on Ten-X and buyers aren’t going to want to buy on the Ten-X platform because they don’t know if they’re competing with a real person or a fake person.” 19 actually suffered any cognizable harm to its reputation from the auction here. Notably, Ten-X cites no testimony that any potential buyers or sellers had heard about the problem with the auction in this case or that any potential buyers or sellers had refused to do business (or continue to do business) with Ten-X because of concern about fraudulent bidding. Indeed, Ten-X’s vice president of sales admitted he was not aware of any business that had been lost by Ten-X because of this auction; nor was he aware of anyone outside of Ten-X who even knew what had happened.11 Nor did Ten-X present any expert testimony on this issue.12 Regarding its costs to investigate, Ten-X again cites to no testimony that sufficiently established such costs. At most, there was some general testimony that Ten-X employees conducted an investigation and discovered Scott Max’s identity shortly after the auction.13 But there was no testimony about what that investigation cost or how much employee time or other resources Ten-X expended in conducting the investigation. Ten-X suggests its legal costs in prosecuting this action should be considered, but it 11 Ten-X notes it filed this public lawsuit but, again, points to no evidence at trial of any lost business or even any potential buyers or sellers who had heard about the problem with the auction of the Property. 12 In denying the motion for nonsuit, the trial court noted “the implication by at least two witnesses [is] that the reputation is harmed,” which is “quantifiable.” For the reasons discussed, we disagree there was sufficient evidence of reputational harm. 13 Ten-X claims it “was also forced to expend substantial resources and time investigating the matter, and then pursuing its claims in litigation.” Ten-X’s record citations for this assertion are to testimony from a Ten-X employee that Ten-X looked at its prior communications with Scott Max and looked into the Scott Max account and Scott Max’s bid history. 20 cites no authority that the attorney fees incurred to bring and prosecute this action are considered cognizable fraud damages. (See Pulliam v. HNL Automotive Inc. (2022) 13 Cal.5th 127, 141 [“‘attorney’s fees qua attorney’s fees’—that is, the fees ‘attributable to the bringing of the . . . action itself’— are not an element of damages”].) Ten-X’s reference to its marketing and related costs to conduct the auction is also unavailing. Those costs were within the contemplation of the Marketing Agreement and Participation Terms and the contractually- provided remedies. The Marketing Agreement and Participation Terms contemplated Ten-X would incur costs related to the auction. And if the auction did not occur because the seller withdrew or the bidder failed to consummate the purchase of the property, there were contractually-specified remedies for those eventualities, namely the withdrawal fee in the Marketing Agreement and the liquidated damages provision in the Participation Terms. C. Punitive Damages Given our conclusion that Ten-X’s fraud claims fail for lack of proof of damages independent from those embraced by the contract claims, there is no tort claim to support the punitive damages award. (See Rattagan, supra, 17 Cal.