Ryan Investment Corporation v. Pedregal De Cabo San Lucas

FILED
NOT FOR PUBLICATION OCT 28 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
RYAN INVESTMENT CORPORATION, No. 09-15409
Plaintiff-counter-defendant - D.C. No. 5:06-cv-03219-JW
Appellee,
v. MEMORANDUM *
PEDREGAL DE CABO SAN LUCAS and
CAPELLA PEDREGAL - CABO SAN
LUCAS, FKA Farallon Spa & Resort,
Defendants,
BRENT R. WALDMAN,
Counter-defendant,
and
JUAN DIAZ RIVERA; et al.,
Defendants - Appellants,
DESARROLLADORA FARALLON and
SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE,
FKA Desarrolladora Farallon S. De R. L.,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Defendants-counter-claimants
- Appellants.
RYAN INVESTMENT CORPORATION, No. 09-15702
Plaintiff-counter-defendant - D.C. No. 5:06-cv-03219-JW
Appellant,
v.
PEDREGAL DE CABO SAN LUCAS and
CAPELLA PEDREGAL - CABO SAN
LUCAS, FKA Farallon Spa & Resort,
Defendants,
BRENT R. WALDMAN,
Counter-defendant,
and
JUAN DIAZ RIVERA; et al.,
Defendants - Appellees,
DESARROLLADORA FARALLON and
SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE,
FKA Desarrolladora Farallon S. De R. L.,
Defendants-counter-claimants
- Appellees.
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Appeal from the United States District Court
for the Northern District of California
James Ware, District Judge, Presiding
Argued and Submitted October 7, 2010
San Francisco, California
Before: THOMPSON, SILVERMAN and McKEOWN, Circuit Judges.
The defendant landowners and related entities appeal the district court’s
judgment in favor of the plaintiff, Ryan Investment Corporation (“Ryan”), in this
diversity suit for breach of an alleged contract relating to the defendants’ resort
development project. The district court awarded Ryan $1.5 million based upon the
court’s interpretation of a letter dated August 28, 2002 (the “Letter”). On appeal,
the parties dispute whether the Letter is a binding contract or an unenforceable
agreement to agree. Ryan contends that if the Letter is not a contract, this court
should affirm the district court’s award on the alternative theory of quantum
meruit.
We review de novo those portions of the district court’s decision that are
based upon an analysis of the alleged contractual language and application of the
principles of contract interpretation. Miller v. Safeco Title Ins. Co., 758 F.2d 364,
367 (9th Cir. 1985). We review factual findings that are based upon extrinsic
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evidence for clear error. Id. We have jurisdiction under 28 U.S.C. § 1332, and we
reverse and remand to the district court for further proceedings.
Even assuming the Letter is binding on the parties, the district court erred in
awarding Ryan contract damages, because Ryan did not perform under the terms of
the Letter. The Letter provides that Ryan was to secure financing for the project by
obtaining a loan and third party equity investors, and was to locate a hotel operator
for the planned resort. Because Ryan did not succeed in obtaining either equity
financing or a loan, it did not fulfill the clause in the Letter pursuant to which the
district court awarded damages. Ryan is also not entitled to any compensation
under the provisions of the Letter that promise Ryan a percentage interest in a
venture between the parties, because that venture was never formed. Ryan was
therefore not entitled to recover contract damages irrespective of the Letter’s
enforceability, and we reverse the district court’s award in the amount of $1.5
million.1
Ryan urges this court to affirm the district court’s award on a theory of
quantum meruit. Although it did not obtain financial support for the project, Ryan
1
Because we reverse, we need not decide whether the district court properly
omitted cross-appellees Juan Diaz Rivera, an individual, and Desarrolladora
Farallon, an entity, as judgment debtors.
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contends it conferred a benefit on the defendants by facilitating the signing of a
hotel operator agreement. The district court did not address this issue.
Ryan may be entitled to recover some amount in quantum meruit for having
successfully facilitated the signing of the hotel operator agreement. See Day v.
Alta Bates Med. Ctr., 119 Cal. Rptr. 2d 606, 609 (Cal. Ct. App. 2002). However,
we decline to affirm the $1.5 million judgment on that theory. In California, “[t]he
measure of recovery in quantum meruit is the reasonable value of the services
rendered, provided they were of direct benefit to the defendant.” Palmer v. Gregg,
422 P.2d 985, 986 (Cal. 1967). The district court did not attempt to value the
services Ryan contends it rendered by facilitating the signing of the hotel operator
agreement. On the record before us, we also have difficulty determining whether
Ryan properly raised the quantum meruit issue before the district court. Because
the district court did not make findings to support a $1.5 million award in quantum
meruit, we do not affirm the judgment on this alternative theory of recovery.
Instead, we remand to the district court for determination of: (a) whether
Ryan properly raised the issue of quantum meruit before the district court; (b) if so,
whether Ryan is entitled to recover under a theory of quantum meruit; and (c) if
Ryan is entitled to recover in quantum meruit, the proper amount of the award.
REVERSED and REMANDED.
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