Steven Valdez v. Philip Neuman

FILED
NOT FOR PUBLICATION FEB 18 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
STEVEN TROY VALDEZ, an individual, No. 08-55674
Plaintiff - Appellant, D.C. No. CV 06-448-CJC (MLG)
v.
MEMORANDUM *
PHILIP NEUMAN, an individual; HILO
AT CAMPBELL HALL ASSOCIATES,
LLC, a New York limited liability
company,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Argued and Submitted February 2, 2010
Pasadena, California
Before: B. FLETCHER, PREGERSON, and GRABER, Circuit Judges.
Plaintiff Steven Troy Valdez appeals the judgment against him after a bench
trial in his suit for contract rescission. We vacate in part, affirm in part, and
remand.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
I. Rescission
The meaning of “assume” is not ambiguous and therefore can be decided as
a matter of law. See Chwialkowski v. Sachs, 834 P.2d 405, 406 (Nev. 1992) (per
curiam) (holding that summary judgment was proper because unambiguous
contractual language can be construed as a matter of law). To “assume” a debt is
to agree to pay that debt when it is due, for assumption of a debt requires
“becom[ing] bound as another is bound.” Black’s Law Dictionary 112 (5th ed.
1979). By interpreting the word “assume” as not creating a duty to pay, the district
court committed legal error. Likewise, it committed legal error by ruling that the
contract “ma[de] no mention of . . . a time table for” payment of debts. The
unambiguous meaning of “assume” created no latitude as to when verified debts
were to be paid; they were to be paid when they were due.1
Because of this legal error, the district court in its post-trial order made no
express finding as to what the ambiguous term “verification” meant. On the last
day of testimony, however, the district court stated on the record its finding that
“both parties [were] on the same page that this [debt] has to be related to the
business and the beverages.” In context, this statement “provides a sufficient
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Neuman understood this. He stated during negotiations, “[W]e’re going to
treat [the verified debt] like a bill.”
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understanding of the issues without a remand for further findings” on this issue,
Societe Generale de Banque v. Touche Ross & Co. (In re U.S. Fin. Secs. Litig.),
729 F.2d 628, 630 (9th Cir. 1984), and the district court’s finding is not clearly
erroneous.
Because the district court did not clearly err in finding that both Valdez and
Neuman understood “verification” to require that his debts be business-related, it
did not clearly err in finding no unilateral mistake. Moreover, nothing in the
evidence suggests that Neuman had reason to know that Valdez expected verified
debts to be paid immediately on demand, whether or not they were due
immediately.
Nevertheless, the district court — again because of its legal error in
interpreting the term “assume” — did not make any factual finding as to whether
Valdez provided sufficient documentation to verify that his debts were business-
related. Before the district court, the parties submitted voluminous evidence, in the
form of correspondence, invoices and similar documents, and trial and deposition
testimony, concerning Valdez’s attempts to verify his debts. On appeal, Neuman
argues that Valdez never provided verification that his debts were business-related.
(Red Br. at 39-42.) Valdez argues that, even if the contract required verification
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that the debts were business-related, he provided sufficient verification. (Gray Br.
at 14-16.)
If Valdez did provide sufficient verification that certain debts were business-
related, and if Neuman did not pay those debts when they were due, then Neuman
breached the contract. Such a breach may constitute a failure of performance
entitling Valdez to rescission of the contract. See Canepa v. Durham, 153 P.2d
899, 903 (Nev. 1944). Because the district court did not make any findings on
those issues, we vacate its judgment on the question whether Valdez may rescind
for a failure of performance. We remand for further findings on whether
verification was sufficient, whether Neuman failed to pay any verified debts when
due, and whether any resulting breach meets the standard for rescission under
Nevada law. Whether the district court decides to make such findings on the
current record or on a supplemented record is a matter left to its discretion.
II. Abandonment
The district court did not clearly err in finding that the parties did not
abandon the Mesa Top agreement by mutual consent. See J.A. Jones Constr. Co.
v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009, 1019 (Nev. 2004) (per curiam)
(addressing contract abandonment); Lyerla v. Watts, 482 P.2d 318, 321 (Nev.
1971) (same). For example, Neuman’s express rejection of Valdez’s offer to
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rescind the contract objectively manifested a lack of consent to abandon the
contract. Nor did the district court clearly err in finding that Defendants did not
acquiesce in Valdez’s subsequent business venture, given that Neuman testified
that he was not aware of the extent of that conflicting agreement. None of
Neuman’s acts was inconsistent with the existence of the Mesa Top agreement
because the agreement did not require the January production run (or any other),
forbid Defendants from engaging in other businesses, or oblige Defendants to
continue operating Mesa Top forever.
The parties shall bear their own costs on appeal.
VACATED IN PART, AFFIRMED IN PART, AND REMANDED.
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