Transbay Auto Service, Inc. v. Chevron USA Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TRANSBAY AUTO SERVICE, INC., a No. 13-15439
California corporation,
Plaintiff-Appellee, D.C. No.
3:09-cv-04932-SI
v.
CHEVRON USA INC., a Delaware
corporation,
Defendant-Appellant.
TRANSBAY AUTO SERVICE, INC., a No. 14-15297
California corporation,
Plaintiff-Appellee, D.C. No.
3:09-cv-04932-SI
v.
CHEVRON USA INC., a Delaware OPINION
corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Susan Illston, Senior District Judge, Presiding
Argued and Submitted
August 10, 2015—San Francisco, California
2 TRANSBAY AUTO SERVICE V. CHEVRON USA
Filed November 30, 2015
Before: Alex Kozinski and Richard C. Tallman, Circuit
Judges, and Lawrence L. Piersol,* Senior District Judge.
Opinion by Judge Tallman;
Dissent by Judge Piersol
SUMMARY**
Rules of Evidence / Hearsay
Reversing the district court’s judgment, after a jury trial,
in an action under the Petroleum Marketing Practices Act, the
panel held that certain evidence was not hearsay and should
have been admitted as an adoptive statement.
The district court awarded the plaintiff almost half a
million dollars as compensation for overpaying for a gasoline
service station. The defendant contended that the station’s
$2.375 million price tag constituted a “bona fide offer” under
the Act.
The panel held that a third-party appraisal of the property
that valued it higher than either of the appraisals
commissioned by the parties was not hearsay, and should
*
The Honorable Lawrence L. Piersol, Senior United States District
Judge for the District of South Dakota, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
TRANSBAY AUTO SERVICE V. CHEVRON USA 3
have been admitted into evidence as an adoptive statement
under Federal Rule of Evidence 801(d)(2)(B). Using the
“possession plus” test, the panel held that when a party acts
in conformity with the contents of a document¯e.g., by
giving an independent appraisal to a lender in support of
accomplishing its objective to secure a commercial
loan¯such an action constitutes an adoption of the
statements contained therein even if the party never reviewed
the document’s contents. The panel further held that such an
action constitutes an adoption even if the third party never
itself uses or relies on the document. Where, however, a
party forwards a document while acting as a mere messenger,
this does not constitute an adoption. The panel reversed the
district court’s judgment and remanded the case for a new
trial.
Dissenting, District Judge Piersol wrote that the
possession plus rule had not been adopted in this circuit at the
time of trial and should not be applied retroactively.
COUNSEL
David S. Ettinger (argued) and Mitchell C. Tilner, Horvitz &
Levy LLP, Encino, California; Robert C. Phelps, Glynn &
Finley, LLP, Walnut Creek, California, for Defendant-
Appellant.
Samuel T. Rees (argued) and Martin R. Fox, Bleau Fox, Los
Angeles, California, for Plaintiff-Appellee.
4 TRANSBAY AUTO SERVICE V. CHEVRON USA
OPINION
TALLMAN, Circuit Judge:
The dispute before us stems from the multi-million dollar
purchase of a gasoline service station in the West Portal
neighborhood of San Francisco. Chevron USA Inc. contends
the station’s $2.375 million price tag constituted a “bona fide
offer” under the Petroleum Marketing Practices Act
(“PMPA”). Transbay Auto Service, Inc. rejects this argument
and urges us to preserve the jury verdict awarding it almost
half a million dollars as compensation for overpaying for the
property. We must decide whether the district court erred in
excluding at trial a third-party appraisal of the property that
valued it significantly higher than either of the appraisals
commissioned by the parties. We find this appraisal should
have been admitted as an adoptive statement under Federal
Rule of Evidence 801(d)(2)(B), and we reverse.
I
Beginning in the late 1930s, Chevron owned the land
located at 301 Claremont Boulevard in San Francisco,
California (the “property”). While the oil company initially
operated its own Chevron-branded service station there, over
the years it leased the service station to independent dealers
who continued to operate under the Chevron banner. These
independent dealers, known as franchisees, paid rent to
Chevron in exchange for the right to operate the service
station on the property.
In 2001, Chevron and Transbay—which is solely owned
by Mike Tsachres—entered into a service station franchise
relationship. At the time they entered into the franchise,
TRANSBAY AUTO SERVICE V. CHEVRON USA 5
Chevron informed Transbay it intended to sell the property
sometime in the near future. In May 2008, Chevron
communicated to Transbay its intent to do so. Chevron
solicited bids from interested purchasers. Transbay submitted
a bid in addition to two other companies. These bids ranged
from $1.2 to $1.9 million, with Transbay’s $1.8 million bid
falling in between.1 Ultimately, none of these bids resulted
in a completed transaction for the disposition of the property.
Chevron therefore opted to make what it deemed to be a
“bona fide offer” to sell the property to Transbay in
accordance with the PMPA. See 15 U.S.C.
§ 2802(b)(3)(D)(iii). “[A] bona fide offer under the PMPA
is measured by an objective market standard. To be
objectively reasonable, an offer must approach fair market
value.” Ellis v. Mobil Oil, 969 F.2d 784, 787 (9th Cir. 1992)
(quotation omitted).
To determine the property’s fair market value, Chevron
employed Deloitte Financial Advisory Services to conduct an
appraisal of the property. After learning that buildings in the
West Portal neighborhood are generally restricted to a height
limitation of twenty-six feet, Deloitte revised its initial
appraisal from $3.24 million to $2.386 million as the
property’s “highest and best use” for retail or commercial
space. In its revised appraisal, Deloitte deemed the property
worth $1.5 million if it continued to be operated as a service
station (a “going concern” valuation).
After Deloitte issued its revised appraisal, Chevron
offered to sell the property to Transbay as a branded station
1
One of the bidding companies, Highland, initially offered $2.5 million
for the property. It revised this bid to $1.9 million after an investigation
period.
6 TRANSBAY AUTO SERVICE V. CHEVRON USA
for $2.386 million, or as an unbranded station for a slight
haircut at $2.375 million. On behalf of Transbay, Tsachres
accepted the unbranded offer under protest. In order to fund
this purchase, Tsachres sought financing from a bank. While
he faced rejection from almost all of the sixteen lenders he
approached, Tsachres obtained some traction with American
California Bank. This bank commissioned Property Sciences
Group to appraise the property, which valued it at $2.52
million as a going concern (“PSG Appraisal”). Tsachres
acknowledged the PSG Appraisal was conducted “for the
purposes of [his] loan application.” And he personally
participated in the process by providing financial information
and submitting to an interview with PSG’s appraiser.
Although American California Bank ultimately declined to
extend a loan to Transbay, it provided Tsachres with a copy
of the PSG Appraisal.
Transbay then sought financing from California Pacific
Bank (“CPB”). CPB’s chairman instructed Tsachres,
“[w]hatever you have, bring them to me.” The parties dispute
whether Tsachres ever looked at the PSG Appraisal. But
there is no dispute that when Tsachres went to the bank to
apply for the loan, he provided the chairman with an envelope
containing the PSG Appraisal. According to Tsachres’s
testimony at trial, the chairman offered to make the loan on
the spot without looking at the envelope’s contents.
Nevertheless, Tsachres did not obtain the final paperwork
approving his $1.782 million loan until three days later. After
purchasing the property from Chevron, Transbay entered into
a new partnership with Valero to re-brand the service station.
TRANSBAY AUTO SERVICE V. CHEVRON USA 7
II
In 2009, Transbay filed a single cause of action against
Chevron for violating the PMPA by failing to make a bona
fide offer to sell the property. The district court denied
Chevron’s motion for summary judgment. In doing so, the
district court made evidentiary rulings to determine the
evidence it could consider in support of each party. After
finding the facts “conflicting as to whether Tsachres read,
understood, and acceded to the PSG Appraisal,” the district
court held:
For purposes of ruling on this evidentiary
objection, the Court need only decide whether
there is enough evidence for a jury reasonably
to conclude that the plaintiff adopted the
statement. On this record, there is enough
such evidence, albeit disputed. The Court
finds that the PSG Appraisal is admissible as
an adoptive admission and plaintiff’s
objections are overruled.
The district court adhered to this ruling during a colloquy
regarding the parties’ opening arguments when Transbay said
it would object to Chevron’s introduction of the PSG
Appraisal. Chevron referenced the district court’s previous
adoptive admission summary judgment ruling, after which the
district court stated, “I think that’s right.” When Chevron
argued that nothing had changed between the summary
judgment order and trial, the district court overruled
Transbay’s objection. As a result, Chevron discussed the
PSG Appraisal during its opening argument to the jury.
8 TRANSBAY AUTO SERVICE V. CHEVRON USA
Critically—after a mid-trial voir dire of Tsachres outside
the presence of the jury—the district court changed its ruling
and did not permit Chevron to introduce the PSG Appraisal.
During the voir dire, Tsachres testified he never reviewed the
PSG Appraisal before giving it to CPB. The district court
rejected Chevron’s efforts to impeach Tsachres with his
deposition testimony:2 “[T]he only evidence is that he didn’t
read these materials. . . . There’s no contrary evidence. . . .
I don’t think the deposition said that he read those materials,
if that’s what you’re saying.” The district court consequently
deemed the PSG Appraisal inadmissible, ruling that “I just
think on the state of this record it doesn’t come in as an
adoptive admission.”
Without the PSG Appraisal, the parties presented the jury
with three valuations: (1) Chevron’s revised $2.386 million
appraisal if the property was operated at its “highest and best
use”; (2) Transbay’s $1.8 million appraisal—created for
litigation purposes—if the property continued to operate as a
service station; and (3) Chevron’s revised $1.5 million
appraisal if the property continued to operate as a service
2
During the voir dire, Chevron read Tsachres’s deposition testimony
into the record:
Question: All right. Have you seen this appraisal
before, that we’ve marked as Exhibit 106?
Answer: As I mentioned earlier, they gave it to me, but
this bank when they reject it they give me this package.
Question: All right. And so did you see a copy of this
appraisal that we’ve marked as Exhibit 106 prior to
when you closed on the deal?
Answer: Yes.
TRANSBAY AUTO SERVICE V. CHEVRON USA 9
station.3 In addition, Transbay proffered an attorney land use
expert who testified that the process to convert the property
from a service station to a retail or commercial use would
cost approximately $500,000 and take several years due to a
specific San Francisco zoning ordinance.4 The jury also
learned about the various bids submitted on the property.
After a four-day trial, the jury returned a verdict in favor
of Transbay and awarded it $495,000 in damages. Chevron
subsequently filed a motion for, among other relief, a new
trial based on the district court’s exclusion of the PSG
Appraisal. The district court’s denial of this motion reiterated
its bench order, finding that no evidence “indicated that Mr.
Tsachres actually read the contents of the PSG Appraisal.”
It justified the departure from its earlier admission ruling on
the basis that at the summary judgment stage there had not
yet been an evidentiary hearing. The propriety of the district
court’s denial of Chevron’s post-verdict motion is now before
us on appeal.
3
The jury also learned about Chevron’s initial “highest and best use”
appraisal, as well as its initial going concern appraisal.
4
“No owner of a property used as an Automotive Service Station shall
change the use of the property to a different type of use without first
applying for and receiving either a Conditional Use authorization from the
City Planning Commission, or a conversion determination from the
Zoning Administrator. Such authorizations shall be in addition to any
other permit or authorization required for a proposed service station
conversion under any applicable City, State or [F]ederal law or
regulation.” San Francisco, Cal., S.F. Planning Code § 202.5(c)(1) (2015)
(limitation on conversions of automotive service stations) (formerly
§ 228(c)(1) (2012)).
10 TRANSBAY AUTO SERVICE V. CHEVRON USA
III
“[W]e review de novo the district court’s construction of
hearsay rules, but review for abuse of discretion the court’s
determination to admit hearsay evidence.” United States v.
Marguet-Pillado, 560 F.3d 1078, 1081 (9th Cir. 2009). With
respect to adoptive admissions, “the district court must first
find that sufficient foundational facts have been introduced
for the jury reasonably to conclude that the defendant did
actually [adopt] the statement.” United States v. Monks,
774 F.2d 945, 950 (9th Cir. 1985) (addressing adoptive
admission by silence). “[I]t’s not a question of the court
weighing the evidence at this time and deciding whether the
showing is strong or weak. The court merely needs to decide
that there is a substantial enough showing to present the issue
to the jury for them to perform that weighing function.”
United States v. Gil, 58 F.3d 1414, 1420 (9th Cir. 1995)
(alteration omitted) (quoting unpublished district court
opinion) (admitting drug ledgers found in defendant’s
possession).
IV
As a matter of first impression, we hold that when a party
acts in conformity with the contents of a document—e.g., by
giving an independent appraisal to a lender in support of
accomplishing its objective to secure a commercial
loan—such an action constitutes an adoption of the
statements contained therein even if the party never reviewed
the document’s contents. We further hold that such an action
constitutes an adoption even if the third-party never itself
uses or relies on the document. Where, however, a party
forwards a document while acting as a mere messenger, this
does not constitute an adoption.
TRANSBAY AUTO SERVICE V. CHEVRON USA 11
A
Rule 801(d)(2)(B) dictates that statements adopted by a
party-opponent do not constitute hearsay:
(d) Statements That Are Not Hearsay. A
statement that meets the following conditions
is not hearsay:
(2) An Opposing Party’s Statement. The
statement is offered against an opposing party
and:
(B) is one the party manifested that it adopted
or believed to be true[.]
Fed. R. Evid. 801(d)(2)(B).
We use the “possession plus” test to determine adoption.
See United States v. Pulido-Jacobo, 377 F.3d 1124, 1132
(10th Cir. 2004) (“[W]e do adopt the ‘possession plus’
standard articulated by the . . . Ninth Circuit[.]” (citations
omitted)). This standard is derived from our decision in
United States v. Ospina, 739 F.2d 448 (9th Cir. 1984). In
Ospina, as evidence of the defendant’s participation in a drug
conspiracy, the government sought to introduce two business
cards with notations written on the back with the location of
the drug transfer and the address of his co-conspirators’ hotel.
Id. at 451. We held these business cards admissible under
Rule 801(d)(2)(B) not only because they were in the
defendant’s possession, but because “Ospina acted on the
information written on the cards when he traveled to the
address written there to pick up the cocaine.” Id. We
emphasized the significance of the defendant’s possession
12 TRANSBAY AUTO SERVICE V. CHEVRON USA
plus his additional act of travel in reliance on the business
cards’ notations. See id.
While it is well settled there must be evidence of adoption
“beyond mere possession,” United States v. Carrillo, 16 F.3d
1046, 1049 (9th Cir. 1994), we have not yet addressed facts
analogous to the situation here where a party acted based on
the contents of a document, but without necessarily reviewing
the document first. We and other courts have previously held
that a party who relies on a third-party document by
submitting the document to another—but after reviewing its
contents—constitutes an adoptive admission. In Sea-Land
Service, Inc. v. Lozen International, LLC, 285 F.3d 808, 821
(9th Cir. 2002), an employee adopted an internal
memorandum that had been e-mailed to her by copying the
entire body of the memorandum into her e-mail to another
and prefacing it with an inculpatory statement. Where the
inculpatory statement was clearly based on the contents of the
memorandum, the employee “incorporated and adopted the
contents of [the] original message because her remark
manifested an adoption or belief in the truth of the
information contained in the original e-mail.” Id. (quotation
omitted).
One of our sister circuits “ha[s] identified the correct
approach where documents are concerned as asking whether
the surrounding circumstances tie the possessor and the
document together in some meaningful way.” Pilgrim v. Trs.
of Tufts Coll., 118 F.3d 864, 870 (1st Cir. 1997) (quotation
omitted), abrogated on other grounds by Nat’l R.R.
Passenger Corp. v. Morgan, 536 U.S. 101 (2002). The First
Circuit deemed a grievance committee report adopted where
a university president—who had been provided the report by
the authoring committee—followed the “serious” action
TRANSBAY AUTO SERVICE V. CHEVRON USA 13
recommended in the report by removing supervisory duties
from an employee’s allegedly discriminating boss. Id. The
president’s “acceptance of the contents of the [r]eport and his
implementation of its recommendations, without disclaimer,
served as an adoption of the [r]eport for the purposes of Rule
801([d])(2)(B).” Id. Similarly, in Grundberg v. Upjohn Co.,
137 F.R.D. 365, 366 (D. Utah 1991), the defendant
corporation manifested an adoption of a study conducted by
an affiliated, non-employee doctor by submitting it to the
FDA in an effort to obtain approval of a drug. To constitute
an adoptive admission, the action that a party takes in
conformity with the document need not be serious:
There is no doubt that where a party’s use of
a document supplied by another in fact
represents the party’s intended assertion of the
truth of the information therein, an adoptive
admission can be found. Situations of this
sort are most commonly encountered where
the party forwards the document to another in
response to some request (or perceived need)
for information of the sort contained in the
document.
White Indus., Inc. v. Cessna Aircraft Co., 611 F. Supp. 1049,
1062–63 (W.D. Mo. 1985) (citations omitted).
Thus, the only difference between existing case law and
the issue before us on appeal is whether the party personally
reviewed the third-party content before submitting it to
another. We find that this distinction has no import. To
illustrate why this distinction is irrelevant, a parallel may be
drawn to criminal cases. An individual who submits a false
loan application to a bank faces punishment if he was
14 TRANSBAY AUTO SERVICE V. CHEVRON USA
willfully blind to the falsity of the contents of the application.
See, e.g., United States v. Patela, 578 F. App’x 139, 144 (3d
Cir. 2014) (upholding willful blindness instruction given to
jury who convicted the defendant because “the jury could
reasonably infer that Patela deliberately failed to review
documents in order to distance himself from the fraud”);
United States v. Green, 648 F.3d 569, 582 (7th Cir. 2011)
(holding an “ostrich instruction” appropriate in mortgage
fraud and conspiracy case where Green “was aware that his
co-defendants had offered to obtain false documents for him
and that they had done so for others in the past,” “signed
blank loan applications,” and “never met some of the
individuals who he represented on his loan materials would
be renting the properties”); cf. United States v. 3814 NW
Thurman St., Portland, Or., A Tract of Real Prop., 164 F.3d
1191, 1196 (9th Cir. 1999), superseded by statute, 18 U.S.C.
§ 983(d) (2000) (“The innocent owner defense [to civil
forfeiture] does not apply, however, where the owner was
willfully blind to false statements made in a loan
application.”); United States v. Geisen, 612 F.3d 471, 475,
488 (6th Cir. 2010) (upholding conviction for making false
statements in order to keep a nuclear power station open, and
finding willful blindness instruction proper where “the
government presented ample evidence from which a rational
jury could infer that Geisen deliberately chose not to inform
himself in preparing the submissions to the [Nuclear
Regulatory Commission]”).
Therefore, a party who is only vaguely aware of the
contents of a document manifests an intent to adopt these
contents by using the document to accomplish an objective or
by acting in conformity with the document. See Grundberg,
137 F.R.D. at 370 (“Even if the person adopting the statement
had no personal knowledge or first hand information about
TRANSBAY AUTO SERVICE V. CHEVRON USA 15
the reports, if a person manifests their acceptance of
information, the admission by adoption is admissible non-
hearsay evidence.”). The Federal Rules bear out this
conclusion: “While knowledge of contents would ordinarily
be essential, this is not inevitably so. . . . Adoption or
acquiescence may be manifested in any appropriate manner.”
Fed. R. Evid. 801(d)(2)(B) note. “A party may adopt a
written statement if the party uses the statement or takes
action in compliance [with] the statement.” 5 Jack B.
Weinstein & Margaret A. Berger, Weinstein’s Federal
Evidence § 801.31[3][b] (Joseph M. Laughlin ed., 2d ed.
2002), cited with approval in Sea-Land Serv., 285 F.3d at
821; see also Grundberg, 137 F.R.D. at 369 (“An adoptive
admission may be oral or written or by conduct.”). We
therefore embrace the First Circuit’s formulation of our
“possession plus” standard as it pertains to documents—we
do not look to whether the party has affirmatively reviewed
the document, but whether “the surrounding circumstances tie
the possessor and the document together in some meaningful
way.” Pilgrim, 118 F.3d at 870.
B
Here, on de novo review, we hold the district court
applied the incorrect standard. Rather than evaluate
Tsachres’s actions under the “possession plus” standard, the
district court limited the scope of Rule 801(d)(2)(B) to
whether the evidence established that Tsachres did “actually
hear, understand, and accede to the statement.”5 In doing so,
5
The dissent asserts that we are improperly applying the “new
‘possession plus’ rule . . . retroactively.” Dissent at 20. But the
possession plus rule was not suddenly created for this case. As the Tenth
Circuit recognized more than ten years ago in Pulido-Jacobo, 377 F.3d at
16 TRANSBAY AUTO SERVICE V. CHEVRON USA
the district court ignored the actions Tsachres took by
focusing solely on whether he had read the PSG Appraisal.
Although the “hear, understand, and accede” language comes
from our oft-cited holding in Monks, 774 F.2d at 950, that
case is distinguishable because it examined whether the
defendant had adopted an oral statement by remaining silent.
While Monks most certainly fits within our “possession plus”
standard, it is less applicable to adoptive admissions of
documents.
According to Tsachres’s trial testimony, he never opened
the envelope containing the PSG Appraisal. Nevertheless,
when CPB’s chairman called Tsachres and told him
“[w]hatever you have, bring them to me,” it is uncontradicted
that Tsachres knowingly brought the PSG Appraisal to CPB
and handed it to the chairman. At this point, Tsachres
manifested an intent to adopt the PSG Appraisal. He went to
the bank with the hope of inducing it to provide him with a
loan. As part of this inducement, he provided CPB with the
PSG Appraisal. Tsachres does not know whether CPB relied
upon the PSG Appraisal before finalizing the loan three days
later. But by providing the PSG Appraisal in a package of
materials upon which he knew the bank might rely when
deciding whether to make him the loan, he “manifested an
adoption or belief in the truth” of the PSG Appraisal.
Sea-Land, 285 F.3d at 821.
Given his need for the money to buy the property,
Tsachres’s protest that he was a mere messenger rings
hollow. The situation therefore warranted submission of the
PSG Appraisal and his testimony to the jury to decide
whether his conduct amounted to an adoptive admission of
1132, the rule is derived from our 1984 decision, Ospina, 739 F.2d at 451.
TRANSBAY AUTO SERVICE V. CHEVRON USA 17
the value of the land. He did not simply deliver information
on behalf of another entity. Instead, he had a vested interest
in supplying the PSG Appraisal. By providing the PSG
Appraisal in response to the chairman’s directive to bring all
supporting documents to the bank, Tsachres acted like the
“party [who] forwards the document to another in response to
some request (or perceived need) for information of the sort
contained in the document.” White Indus., 611 F. Supp. at
1063.
This record provides sufficient foundational facts for a
jury to reasonably conclude that Tsachres adopted the
valuation contained in the PSG Appraisal. While the district
court may believe that Tsachres did not actually do so, we
agree with the dissent that this is a credibility determination
with which the jury is tasked, not the judge. The PSG
Appraisal should have been admitted under Rule
801(d)(2)(B).
V
The PSG Appraisal—the only third-party appraisal
available—values the property higher than any other
appraisal and remarkably higher than any other going-
concern appraisal. We cannot say with any degree of
confidence that had the jury been presented with the PSG
Appraisal, it would have come to the same conclusion. We
therefore conclude the evidentiary error merits a new trial.
Because we order a new trial, we need not reach the second
issue raised by Chevron on appeal that Transbay failed to
prove its case for damages.
18 TRANSBAY AUTO SERVICE V. CHEVRON USA
We vacate the district court’s Corrected and Consolidated
Final Judgment, and reverse and remand the case for a new
trial.
Costs are awarded to the Appellant.
REVERSED, VACATED, and REMANDED.
PIERSOL, Senior District Judge, dissenting:
I respectfully dissent. It is true that the trial court did not
apply the possession plus rule with regard to adopted
admissions. That rule was not adopted in the Ninth Circuit
until the majority opinion in this decision. At the mid-trial
voir dire, the trial judge heard Tsachres’ testimony that he
never reviewed the PSG Appraisal and found despite his
deposition testimony that there was no submissible issue to
present to the jury on whether or not the PSG Appraisal was
an adoptive admission. Neither the deposition nor the voir
dire testimony showed that Tsachres had read or otherwise
understood the contents of the PSG Appraisal. The trial court
had basis for its conclusion that the rule in the Ninth Circuit
required that Tsachres had read or otherwise understood the
contents of the PSG Appraisal. United States v. Orellana-
Blanco, 294 F.3d 1143, 1148, n.10 (9th Cir. 2002) was relied
upon by the trial court, with that case quoting United States
v. Monks, 774 F.2d 945, 950 (9th Cir. 1985) (before letting in
evidence as an adoptive admission, “the district court must
find that sufficient foundational facts have been introduced
for the jury reasonably to conclude that the defendant did
actually hear, understand and accede to the statement.”)
While Orellana-Blanco and Monks do both involve an oral
TRANSBAY AUTO SERVICE V. CHEVRON USA 19
statement, the requirement of understanding and acceding is
common to oral information as well as written. See Sea-Land
Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808 (9th Cir. 2002)
(employee incorporated a memorandum into her own e-mail,
thus adopting its contents.) Here, the most that the record
indicates is that Mr. Tsachres saw the PSG Appraisal, that
being his deposition testimony, not that he read or understood
the appraisal. His voir dire testimony was that he did not
review the PSG Appraisal before giving it in the package he
received it in to California Pacific Bank. What Mr. Tsachres
did know was that American California Bank had refused him
a loan but did provide him with a copy of the PSG Appraisal.
California Pacific Bank’s chairman then told Tsachres,
“[w]hatever you, have, bring them to me.” and he did.
Since the “possession plus” rule was not applied, it was
not an abuse of discretion for the trial court to find that there
was no submissible jury question of whether Tsachres
understood and acceded to the statements in the PSG
Appraisal. Had the “possession plus” rule been applied at
trial, then it would have been an abuse of discretion to not
submit the adoptive admission question to the jury pursuant
to Federal Rule of Evidence 104.
The majority opinion draws a parallel to criminal cases
involving willful blindness to the contents of a document.
The willful blindness instruction presents that issue to a jury.
The possession plus rule swallows that issue in holding that
when a party acts in conformity with the contents of a
document, such an action constitutes an adoption of the
statements therein even if the party never reviewed the
document's contents.
20 TRANSBAY AUTO SERVICE V. CHEVRON USA
The “possession plus” rule had not been adopted in this
circuit at the time of trial. The new “possession plus” rule
should not be applied retroactively. Nunez-Reyes v. Holder,
646 F.3d 684, 694 (9th Cir. 2011)(en banc)(applying Chevron
Oil Co. v. Hudson, 404 U.S. 97 (1971) for pure prospectivity
in a civil case announcing a new rule of law in the circuit
with the new rule thus not applied to the pending petition for
review).
Accordingly, I respectfully dissent and would affirm.