Kevin Rindlisbacher v. Steinway, Inc. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 20 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN H. RINDLISBACHER, husband; et Nos. 20-17331
al., 21-16085
Plaintiffs-Appellants, D.C. No. 2:18-cv-01131-MTL
v.
MEMORANDUM*
STEINWAY, INC., DBA Steinway & Sons,
a Delaware corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Arizona
Michael T. Liburdi, District Judge, Presiding
Argued and Submitted December 8, 2021
San Francisco, California
Before: WARDLAW, BRESS, and BUMATAY, Circuit Judges.
Kevin and Jami Rindlisbacher and Piano Showroom of Arizona, Inc.
(collectively, “Rindlisbacher”) appeal the district court’s grant of summary
judgment to Steinway, Inc. (“Steinway”) on Rindlisbacher’s claim for constructive
fraud. Rindlisbacher also appeals the district court’s award of attorneys’ fees to
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Steinway. We have jurisdiction under 28 U.S.C. § 1291. Reviewing the grant of
summary judgment de novo, see KST Data, Inc. v. DXC Tech. Co., 980 F.3d 709,
713 (9th Cir. 2020), and the attorneys’ fees award for an abuse of discretion, Johnson
v. MGM Holdings, Inc., 943 F.3d 1239, 1241 (9th Cir. 2019), we affirm.
1. The district court correctly concluded that Rindlisbacher’s fraud claim
is untimely under Arizona’s applicable three-year statute of limitations. See A.R.S.
§ 12-543. The statute of limitations begins to run when the plaintiff discovers facts
constituting fraud, or when he “by reasonable diligence could have learned of the
fraud, whether or not he actually learned of it.” Coronado Dev. Corp. v. Superior
Ct., 678 P.2d 535, 537 (Ariz. Ct. App. 1984); see also Walk v. Ring, 44 P.3d 990,
996 (Ariz. 2002) (“[T]he core question is whether a reasonable person would have
been on notice to investigate.”).
Here, by April 12, 2015, three years before filing suit, Rindlisbacher was on
notice to investigate the Phoenix piano market and thus Steinway’s representations
that the market had a sales potential of forty-five Steinway pianos per year. On
January 30, 2014, Rindlisbacher sent an email to Steinway predicting only twenty-
six piano sales that year and noting that “this market hasn’t sold this number of
Steinway & Son’s units in a very long time—at least 8 years.” In 2011,
Rindlisbacher was also quoted in two newspaper articles acknowledging the difficult
economic climate for piano sales. In addition, his actual sales from 2011 onward
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fell far below forty-five pianos a year. Given this, and given Rindlisbacher’s nearly
four decades of experience in the piano market, his assertion that he lacked both
actual knowledge that Steinway’s sales goal was unreachable, and notice to
investigate the matter, finds no support in the record. Thus, Rindlisbacher’s
constructive fraud claim is time-barred.
2. Regardless, Rindlisbacher’s claim would still fail because he did not
have a “fiduciary or confidential relationship” with Steinway, as is required for a
constructive fraud claim under Arizona law. Green v. Lisa Frank, Inc., 211 P.3d 16,
34 (Ariz. Ct. App. 2009). The contract between the parties provided that “[t]his
Agreement does not create an employer-employee relationship, an agency or joint
venture between Steinway and Dealer. . . . Dealer shall be an independent contractor
only.” When the parties have “expressly characterized their legal relationship, such
characterization will be persuasive” in determining their mutual obligations. Urias
v. PCS Health Sys., Inc., 118 P.3d 29, 35 (Ariz. Ct. App. 2005).
To overcome this contractual provision, Rindlisbacher points to what he
claims is Steinway’s greater bargaining power and its superior access to internal
sales data. But this is insufficient to establish a confidential relationship for purposes
of constructive fraud. See, e.g., Klinger v. Hummel, 464 P.2d 676, 679 (Ariz. Ct.
App. 1970) (finding no confidential relationship in an arms-length real estate
transaction even though “Mr. Hummel was experienced in real estate transactions
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while the Klingers were not”). Steinway’s promotional materials emphasizing the
“Steinway family” and its “partnership” with dealers do not create a confidential or
fiduciary relationship either. See Rhoads v. Harvey Publications, Inc., 700 P.2d 840,
844 (Ariz. Ct. App. 1984) (“Rhoads was told he was a ‘staff member’ and a ‘trusted
and valued member of the Harvey family.’ Those words are not actionable.”). Thus,
Rindlisbacher has not created a genuine dispute of material fact on his constructive
fraud claim, even if it were timely.1
3. The district court did not abuse its discretion in awarding $829,330 in
attorneys’ fees to Steinway as the prevailing party. Attorneys’ fees were available
under Arizona’s fee-shifting statute, which provides that “[i]n any contested action
arising out of a contract, express or implied, the court may award the successful party
reasonable attorney fees.” A.R.S. § 12-341.01(A). “The meaning of ‘arises out of
contract’ is broad for the purposes of this statute.” ML Servicing Co. v. Coles, 334
P.3d 745, 753 (Ariz. Ct. App. 2014). “The test to determine if an action arises out
of contract is whether the plaintiff would have a claim even in the absence of a
contract.” Id. (citation and quotation omitted); see, e.g., Marcus v. Fox, 723 P.2d
1In light of this conclusion, we need not address whether Rindlisbacher advanced a
cognizable theory of damages. In addition, while Rindlisbacher challenges the
district court’s determination that it would not consider new factual allegations that
Rindlisbacher first raised at the summary judgment stage, the district court explained
why those facts would not change the outcome even if they were considered, and
Rindlisbacher provides no reason to question that conclusion.
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682, 684–85 (Ariz. 1986) (holding that attorneys’ fees were available for the tort of
fraudulent inducement). Here, Rindlisbacher’s claim arises out of a contract within
the meaning of A.R.S. § 12-341.01(A) because the fraud claim would not exist but
for the contractual relationship with Steinway. See id. To that point, Rindlisbacher
in his briefing repeatedly describes his claim as “arising out of the Agreement.”2
The district court correctly rejected Rindlisbacher’s argument that New York
law should apply to the attorneys’ fees question, based on the choice-of-law
provision in the parties’ agreement specifying that “[t]his Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its conflict of laws principles.” We apply Arizona law to determine
the scope of this provision. See, e.g., Winsor v. Glasswerks PHX, L.L.C., 63 P.3d
1040, 1044 (Ariz. Ct. App. 2003). And Arizona courts have determined that
“[c]laims arising in tort are not ordinarily controlled by a contractual choice of law
provision,” unless “resolution of the claims relates to interpretation of the
contract . . . [and] the tort claims could not be adjudicated without analyzing whether
the parties were in compliance with the contract.” Id. at 1043–44 (citation and
quotation omitted); see also Sutter Home Winery, Inc. v. Vintage Selections, Ltd.,
971 F.2d 401, 407 (9th Cir. 1992) (applying Arizona law to tort claims for unfair
2
Rindlisbacher’s argument that A.R.S. § 12-341.01 only applies to contracts
governed by Arizona law lacks merit. Nothing in the statute imposes that limitation.
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competition, despite a California choice-of-law provision); Consol. Data Terminals
v. Applied Digital Data Sys., 708 F.2d 385, 390 n.3 (9th Cir. 1983) (“[T]ort law and
the law of punitive damages are not controlled by the contract choice of law
provision.”) (punctuation omitted).
Here, Rindlisbacher’s fraud claim does not “relate[] to [the] interpretation” of
the parties’ contract in any relevant sense. Winsor, 63 P.3d at 1044. Unlike the
broad “arising out of” language in A.R.S. § 12-341.01(A), the parties’ narrowly
drawn New York choice-of-law provision does not extend to Rindlisbacher’s instant
tort suit. The district court therefore did not err in applying Arizona law to the issue
of attorneys’ fees, and Rindlisbacher raises no other challenges to the fee award.
AFFIRMED.
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