Korean Electronics Manufacturer Wins $11.6 Million in Breach of Contract and Fraud Case

Galaxia Electronics Co., Ltd. v. Luxmax U.S.A., Inc., et al. (U.S. Dist. Ct., C.D. Cal. Case No. 2:16-cv-05144-JAK-GJS): On July 2, 2025, a federal jury awarded Galaxia Electronics Co., Ltd. (“Galaxia”) $11,588,000 in compensatory damages against Luxmax U.S.A., Inc. (“Luxmax”), RWS Management Inc. (“RWS”), and Robert Scarnechia, finding the defendants liable for breach of contract and fraud in connection with a failed consumer electronics distribution agreement.

Galaxia, a Korean electronics manufacturer, alleged that it entered into a business relationship with Luxmax and RWS for the sale and distribution of its products in the United States. According to Galaxia, the defendants engaged in a fraudulent scheme involving unpaid invoices, misappropriation of goods, and false financial representations, which induced Galaxia to continue shipments under false pretenses. The company further contended that RWS acted as an alter ego to shield assets from creditors and that Scarnechia and the entities executed a plan to extract goods without payment.

Defendant Daniel Murphy successfully moved to dismiss several claims against him—including tortious interference and conversion—and obtained partial summary judgment on others. He defended himself at trial on a remaining promissory fraud claim, ultimately prevailing when the jury found no fraudulent promises and determined Galaxia had not justifiably relied on any statements by him. The verdict resulted in a complete defense win for Murphy.

The court’s final judgment awarded Galaxia $11.588 million in compensatory damages, plus $238,319.30 in attorneys’ fees, $11.3 million in prejudgment interest, and post-judgment interest at 5.38%. The judgment resolved all claims and terminated the nine-year litigation.

Plaintiff was represented by Bird Marella PC and Jun Law Office. Defendants were represented by Polsinelli LLP and the Law Office of Frederic F. Grannis.