Talisman Capital Talon Fund, L v. Rudolf Gunnerman , 388 F. App'x 715 ( 2010 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUL 21 2010
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
TALISMAN CAPITAL TALON FUND, No. 09-16256
LTD.,
D.C. No. 3:05-cv-00354-BES-
Plaintiff - Appellant, VPC
v.
MEMORANDUM*
RUDOLF W. GUNNERMAN;
SUPLHCO, INC.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Nevada
Brian E. Sandoval, District Judge, Presiding
Argued and Submitted June 16, 2010
San Francisco, California
Before: RIPPLE,** RYMER and FISHER, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Kenneth F. Ripple, Senior United States Circuit Judge for
the Seventh Circuit, sitting by designation.
Talisman Capital Talon Fund appeals the district court’s decision in
Gunnerman and SulphCo’s favor on breach of contract and tort claims after a
bench trial. We have jurisdiction under 28 U.S.C. § 1291 and affirm.
First, Talisman on appeal does not dispute that the meaning of the Field is
ambiguous and that extrinsic evidence is relevant to interpret its meaning, but
argues that the district court committed legal error by relying on certain extrinsic
evidence that is irrelevant or inadmissible under controlling Delaware contract
principles. We disagree. The district court properly relied on extrinsic evidence of
the parties’ objective manifestations of intent to interpret an ambiguous contract
term. See Eagle Indus. Inc. v. DeVilbiss Health Care Inc., 702 A.2d 1228, 1233
(Del. 1997) (“In construing an ambiguous contractual provision, a court may
consider evidence of prior agreements and communications of the parties as well as
trade usage or course of dealing.”); United Rentals, Inc. v. RAM Holdings, Inc.,
937 A.2d 810, 835 (Del. Ch. 2007) (“[E]xtrinsic evidence may include overt
statements and acts of the parties, the business context, prior dealings between the
parties, and business custom and usage in the industry.”) (internal alteration and
quotation marks omitted).
Second, the district court’s factual findings in support of its interpretation of
the contract were not clearly erroneous. See In re U.S. Fin. Sec. Litig., 729 F.2d
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628, 632 (9th Cir. 1984) (“When the inquiry extends beyond the words of the
contract and focuses on related facts [] the trial court’s consideration of extrinsic
evidence is entitled to great deference and its interpretation of the contract will not
be reversed unless it is clearly erroneous.”). Talisman contends that the definition
of the Field in the Transfer Agreement included the disputed SulphCo technology.
Among other things, Talisman heavily relies on the express exclusion of the
disputed technology from Field in the Termination and Release Agreement,
arguing that this exclusion would have been unnecessary had the parties
understood the Field not to include the disputed technology in any event. It also
relies on its expert’s opinion that the disputed technology clearly comes within the
parameters of the Field, and urges that Gunnerman’s and Clean Fuels’ conduct in
treating it as outside the Field must be disregarded because Gunnerman concealed
a letter acknowledging the “natural fit” between the technologies.
The district court, after considering all this evidence, rejected Talisman’s
reading of the Field’s application to the disputed technology, finding that “the
weight of the evidence indicates that Gunnerman and Capital Strategies
[Talisman’s predecessor in interest] did not intend or believe that the Transfer
Agreement . . . conveyed the [disputed] technology to Capital Strategies.” This
finding is supported by the record. Capital Strategies was fully aware in 2003 of
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Clean Fuel’s acquiescence in Gunnerman’s position that the disputed technology
was not covered by the Field. It also had independent access to information
describing the disputed technology, including published patents assigned to
SulphCo that Talisman now claims to own, notwithstanding any representations or
nondisclosure about that technology by Gunnerman. These patents were not
included in the Transfer Agreement’s nonexclusive list of patents and applications
subject to the transfer. Moreover, whether or not Clean Fuels’ acquiescence in
Gunnerman’s claim that the SulphCo technology was outside the Field was
misinformed, Capital Strategies had every reason to understand Gunnerman’s
interpretation of the Field during the 2003 negotiations. If, contrary to that
interpretation, the disputed technology is clearly within the Field (as Talisman’s
expert now opines), Capital Strategies could have challenged Gunnerman’s
interpretation and resolved the dispute by explicit terms in the Transfer Agreement.
Its failure to do so further supports the district court’s finding that Capital
Strategies did not intend or believe that the Transfer Agreement affected the
disputed technology. Although Talisman’s current interpretation of the scope of
the Field is not wholly implausible, the district court’s findings supporting a
contrary interpretation are not clearly erroneous.
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Third, these same reasons defeat Talisman’s argument that the district court
abused its discretion because its contract interpretation is inconsistent with the
testimony of Talisman’s expert witness based on the language of the Transfer
Agreement. The district court resolved the ambiguity as to the scope of the Field
by looking to what Gunnerman and Capital Strategies intended the Transfer
Agreement to mean, as evidenced by their objective manifestations of intent and
the context in which it was negotiated. The court’s resolution was “support[ed]
[by] inferences that may be drawn from the record,” notwithstanding Talisman’s
expert’s contrary testimony. United States v. Hinkson, 585 F.3d 1247, 1262 (9th
Cir. 2009) (en banc) (explaining the abuse of discretion standard of review).
Finally, having affirmed the district court’s interpretation of the Transfer
Agreement, we also affirm its rejection of Talisman’s conversion claim. Talisman
does not own the relevant property under the Transfer Agreement and cannot
prevail on a claim that another has converted it. See Evans v. Dean Witter
Reynolds, Inc., 5 P.3d 1043, 1048 (Nev. 2000); Khorshid, Inc. v. Christian, 257
S.W.3d 748, 758-59 (Tex. App. 2008).
AFFIRMED.
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