Irving H. Levin and Harold A. Lipton v. Philip H. Knight ( 1986 )

OPINION

Before BARNES and REINHARDT, Circuit Judges and GILLIAM,^* District Judge.

GILLIAM, District Judge:

1. Background¹

Irving H. Levin and Harold A. Lipton, plaintiffs below and former owners of the San Diego Clippers professional basketball franchise, appeal from a grant of summary judgment for defendant Philip Knight in this action for breach of contract and fraud arising from Knight’s alleged agreement to purchase the Clippers.

The district court granted summary judgment on the contract claim against the plaintiffs on the basis that a three-page written memorandum detailing the understanding of the parties was insufficient, as a matter of law, to overcome the requirements of the statute of frauds. The court also granted summary judgment against the plaintiffs on their fraudulent misrepresentation claim, since under California law current at the time of the court’s decision, the action for fraudulent misrepresentation could not be maintained upon an agreement unenforceable under the statute of frauds.

2. Standard of Review

Summary judgment may be rendered if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c).

We review the district court’s decision de novo to determine whether there exist any genuine issues of material fact and whether the district court correctly applied the substantive law in ruling on the motion. Deukmejian v. United States Postal Service, 734 F.2d 460, 462 (9th Cir.1984).

The district court’s grant of summary judgment will be affirmed if, viewing the evidence and the inferences therefrom in the light most favorable to the party opposing the motion, there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. R.F.D. Publications, Inc. v. Oregonian Publishing Co., 749 F.2d 1327, 1328 (9th Cir.1984).

3. Summary Judgment

We hold that the district court’s grant of summary judgment on the contract claim was inappropriate.

Under California law, the lengthy written memorandum here would be sufficient to comply with the statute of frauds if all disputed matters were resolved in plaintiffs’ favor. The written memorandum indicates sufficiently the few terms deemed essential as a matter of law by California courts to satisfy the statute of frauds requirements: the subject matter, the price, and the party against whom enforcement is sought. Further, there appear to be genuine issues of fact as to whether specific allocation of various debts and liabilities were considered essential by the parties.

As the California Supreme Court stated in its most recent discussion of the California statute of frauds:

It is important to remember that “the primary purpose of the statute [of frauds] is evidentiary, to require reliable evidence of the existence and terms of the contract and to prevent enforcement through fraud or perjury of contracts never in fact made ... [The] requirement of a memorandum is read in light of the dispute which arises and the admissions of the party to be charged; there is no need for evidence on points not in dispute. (emphasis and citations omitted)

Seaman’s Direct Buying Service v. Standard Oil, 36 Cal.3d 752, 764, 686 P.2d 1158, 1164, 206 Cal.Rptr. 354, 360 (1984).

This court finds the case of Seaman’s persuasive, and notes that other California cases have resolved this issue in favor of plaintiffs where far fewer significant terms or conditions were set forth in the disputed writing.

The issues presented as to the statute of frauds governing securities transactions are overcome by the finding that there was no dispute as to the amount of stock involved. All parties understood that the agreement was for transfer of the Clippers as an entire unit, and that if a stock transaction were eventually to transpire, then all of said stock would be transferred.

The grant of summary judgment against the plaintiffs on the fraud claim is also reversed. Tenzer v. Superscope, Inc., 39 Cal.3d 18, 216 Cal.Rptr. 130, 702 P.2d 212 (1985) now permits an action for fraudulent misrepresentation upon an alleged oral agreement or upon an agreement otherwise unenforceable under the statute of frauds. Upon remand, the fact-finder should be instructed that it may consider the plaintiffs’ tort claim, even if it does not find that the Levin and Knight memorandum constitutes a valid contract.

The court finds that its determination as to these issues is dispositive, and therefore finds it unnecessary to address the remaining issues presented on appeal.

REVERSED AND REMANDED for further proceedings.

* Honorable Earl B. Gilliam, United States District Judge, Southern District of California, sitting by designation.

1 . The majority prepared the disposition of this case as a memorandum, since we do not believe it to be appropriate for publication under Ninth Cir.R. 21(b). Our dissenting colleague has called for its publication under subsection (6) of that rule, which allows the author of a dissent or concurrence to request publication of a disposition.