Apex Abrasives v. Wgi Heavy Minerals ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 18 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
APEX ABRASIVES, INC., No. 17-35057
Plaintiff-Appellant, D.C. No.
2:14-cv-00037-SEH-JTJ
v.
WGI HEAVY MINERALS, INC.; WGI MEMORANDUM*
HEAVY MINERALS, LLC; DOE
BUSINESS ENTITIES 1-3,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Montana
Sam E. Haddon, District Judge, Presiding
Argued and Submitted May 16, 2018
Seattle, Washington
Before: BERZON, THACKER,** and HURWITZ, Circuit Judges.
This case concerns a marketing and sales agreement (“Agreement”) between
Apex Abrasives, Inc. (“Apex”) and WGI Heavy Minerals, Inc. (“WGI”). Apex
appeals a judgment as a matter of law in favor of WGI entered in the midst of a jury
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Stephanie Dawn Thacker, United States Circuit Judge
for the Fourth Circuit, sitting by designation.
trial. We vacate in part and affirm in part.
1. “We review de novo the district court’s decision to grant judgment as a
matter of law, drawing all reasonable inferences in favor of [the nonmoving party].”
Peralta v. Dillard, 744 F.3d 1076, 1085 (9th Cir. 2014). In doing so, we hold that
the district court erred by interpreting the Agreement as unambiguously lacking a
minimum purchase term. To be sure, the Agreement is unambiguous -- but in the
other direction. The Agreement plainly mandates that Apex must “sell” and WGI
must “purchase” “a minimum of 5000 short Tons of Garnet in Year 1, and 10,000
short Tons per calendar year thereafter during the Term.” (§ 3.1). See Corp. Air v.
Edwards Jet Ctr., 190 P.3d 1111, 1120–21 (Mont. 2008) (explaining that in
Montana, “[t]he construction and interpretation of a contract is a question of law”
and “[w]here the language of a contract is unambiguous . . . the duty of the court is
to apply the language as written”). Sections 4.3 and 4.4 of the Agreement, on which
the district court relied, cannot and do not override the earlier provision. Rather,
they provide the procedures for implementing it.
2. The district court also erred by deciding as a matter of law that the
Agreement was modified by performance. Drawing all reasonable inferences in
favor of Apex, a reasonable jury could conclude that the Agreement was not
modified. Although WGI ordered less than the minimum purchase requirement,
Apex repeatedly voiced its dissatisfaction and specifically invoked the minimum
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purchase term in writing soon after the first possible alleged breach, which was at
the end of the first year of the Agreement.
3. Accordingly, the district court erred in granting judgment as a matter of
law to WGI on Apex’s breach of contract claim. We vacate the judgment and
remand for further proceedings on that claim. And, because the district court’s ruling
on the remainder of Apex’s breach of implied covenant of good faith and fair
dealing, constructive fraud, and negligent misrepresentation claims was enmeshed
with its ruling on the breach of contract claim, we also vacate the judgment as a
matter of law on those claims, and remand to the district court for further
proceedings.
4. The parties voluntarily stipulated to dismissal with prejudice of Apex’s
tortious interference claim. See Fed. R. Civ. P. 41(a)(1)(A)(ii); see also Eitel v.
McCool, 782 F.2d 1470, 1473 (9th Cir. 1986) (holding that “an unqualified oral
stipulation of dismissal made in open court satisfies Rule 41(a)(1)(ii), even where
no formal stipulation was signed by the parties”). The district court’s March 25,
2016 order vacating its own “rulings” from the February 2016 pretrial conference
did not revive the claim.
5. In light of our ruling on the contract claims and remand for trial, we need
not address Apex’s evidentiary arguments on appeal. The challenged evidentiary
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rulings were premised at least in part on the district court’s erroneous interpretation
of the Agreement and may be reconsidered by the district court on remand.
6. The district court did not err in denying Apex’s motion for sanctions; the
court reasonably concluded that that litigation was not reasonably foreseeable at the
time WGI’s records were destroyed. See Leon v. IDX Sys. Corp., 464 F.3d 951,
957–58 (9th Cir. 2006) (indicating that we review a district court’s spoliation
sanctions order for abuse of discretion but that we review its factual findings for
clear error).
7. We also conclude that the district court did not abuse its discretion over
discovery matters by conditioning Apex’s second deposition of a witness on the
payment of WGI’s reasonable attorneys’ fees. A district court’s “broad discretion
to manage discovery and to control the course of litigation under Federal Rule of
Civil Procedure 16,” Avila v. Willits Envtl. Remed. Tr., 633 F.3d 828, 833 (9th Cir.
2011), includes the power to condition a second deposition on the imposition of fees.
8. Finally, because we adduce no evidence of personal bias in the record on
the part of the district judge, we decline to order this case reassigned. But given the
history of this matter, the district court might well conclude that recusal and
reassignment on remand would serve the cause of justice. Each party shall bear their
own costs.
AFFIRMED IN PART, VACATED IN PART, and REMANDED.
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