Proskauer Rose, LLP v. Blix Street Records, Inc.

FILED
NOT FOR PUBLICATION JUN 17 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
PROSKAUER ROSE, LLP, a New York No. 07-56463
limited liability partnership,
D.C. No. CV-06-04040-GW
Plaintiff-counter-defendant-Appellee,
v. MEMORANDUM *
BLIX STREET RECORDS, INC., a
Washington corporation; et al.,
Defendants-counter-plaintiffs-
Appellants,
v.
BERT DEIXLER,
Third-party-defendant-Appellee.
PROSKAUER ROSE, LLP, a New York No. 08-55794
limited liability partnership,
D.C. No. 2:06-cv-04040-GW-
Plaintiff-counter-defendant-Appellee, VBK
v.
BLIX STREET RECORDS, INC., a
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Washington corporation; et al.,
Defendants-counter-claim-3rd-party-
plaintiffs-Appellants.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted February 3, 2010
Pasadena, California
Before: KLEINFELD, WARDLAW and CALLAHAN, Circuit Judges.
In these consolidated appeals, Blix Street Records, Inc. (“Blix Street
Records”) and its sole shareholder, William Straw, appeal the grant of summary
judgment in No. 07-56463 and jury verdict awarding fees in favor of Proskauer
Rose LLP (“Proskauer”) and Bert Deixler in No. 08-55794. We have jurisdiction
pursuant to 29 U.S.C. § 1291. We affirm.
1. The district court correctly held that Straw lacks standing. See Pareto v.
FDIC, 139 F.3d 696, 699-700 (9th Cir. 1998). Straw was a cross-defendant in the
underlying lawsuit. Because Straw was successful in defending against the
plaintiffs’ claims against him individually, obtaining a complete release of the
plaintiffs’ claims without paying any money, Straw as an individual did not have
any damages resulting from Proskauer’s alleged malpractice. Straw, as an
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individual shareholder of Blix Street Records, also lacks standing to complain of
injury to the corporation. That the value of Straw’s shares may have been
diminished is insufficient to demonstrate standing. Id. Nor does the fact of
Straw’s personal liability to Proskauer for fees create standing to assert a
malpractice claim.
2. The district court correctly granted summary judgment in favor of
Proskauer and Deixler on Blix Street Records’ malpractice claim.1 Deixler, a
partner of Proskauer, represented Blix Street Records and Straw in a dispute
arising from a 1997 licensing agreement between Blix Street Records and the
parents of late recording artist Eva Cassidy (the “Cassidys”). That dispute, which
the parties ultimately settled, involved a charge that Blix Street Records
fraudulently concealed royalty payments it owed to the Cassidys by
misrepresenting a license agreement with a third party to be a distribution
agreement. Blix Street Records now asserts that Deixler breached his duty of care
by coercing Straw to settle that case after the third party produced a Blix Street
Records tax record that supported the Cassidys’ position that the third party
1
We grant Appellants’ Requests for Judicial Notice, filed on March 12,
2008, and December 15, 2009, respectively. We also grant Appellees’ Request for
Judicial Notice, filed on April 23, 2008.
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arrangement was a license agreement, for which Blix Street Records owed the
Cassidys additional royalty payments. During the resulting reopening of Straw’s
deposition, moreover, Straw testified that the income reflected in the tax record
was for a licensing—not distribution—agreement. Following the discovery of the
tax record and Straw’s deposition testimony, Deixler informed Straw that he no
longer believed that Blix Street Records had a strong case. The district court
correctly held that this was not a breach of the duty of care that would rise to the
level of malpractice. See Dawson v. Toledano, 109 Cal. App. 4th 387, 397 (Ct.
App. 2003).
The district court also correctly held that Deixler did not breach his duty of
care when he told Straw, based on the new evidence and testimony, that he did not
“relish” going to trial. Cf. People v. Castillo, 233 Cal. App. 3d 36, 59-60 (Ct. App.
1991) (noting that the mere desire not to go to trial for pecuniary reasons cannot
constitute an attorney conflict of interest).
The district court properly awarded summary judgment to Proskauer.
Although a factual dispute exists as to whether certain advice given by Deixler and
Deixler’s refusal to follow Straw’s instructions were each appropriate, Blix Street
Records failed to establish the elements of causation and damages critical to a
malpractice claim. See Viner v. Sweet, 30 Cal. 4th 1232, 1241 (2003). Blix Street
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Records failed to “establish that but for [Deixler’s] negligence . . . [Blix Street
Records] would have obtained a more favorable judgment or settlement in the
action in which the malpractice allegedly occurred.” Id. Blix Street Records
points to no evidence demonstrating that it is more likely than not the Cassidys
would have settled on more favorable terms but for Deixler’s alleged negligence.
Marshak v. Ballesteros, 72 Cal. App. 4th 1514, 1518 (Ct. App. 1999).
3. The district court did not abuse its discretion in denying Blix Street
Records’ Rule 56(f) request for additional discovery. Natural Res. Def. Council v.
Houston, 146 F.3d 1118, 1132-33 (9th Cir. 1998). None of the additional
discovery requests related to the elements of causation and damages. Therefore,
Blix Street Records failed to “show how allowing additional discovery would have
precluded summary judgment.” Id. at 1133.
4. The district court did not abuse its discretion in denying Blix Street
Records’ motion for leave to assert a breach of contract claim after the judgment
was entered. Lindauer v. Rogers, 91 F.3d 1355, 1357 (9th Cir. 1996). “[A]fter
final judgment has been entered, a Rule 15(a) motion may be considered only if the
judgment is first reopened under Rule 59 or 60.” Id. Blix Street Records failed to
move to reopen under Rule 60, and as explained below, the district court did not
err in denying Blix Street Records’ Rule 59(e) motion.
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5. Nor did the district court abuse its discretion in denying Blix Street
Records’ Rule 59(e) motion to alter, amend, or vacate the judgment. See Dixon v.
Wallowa County, 336 F.3d 1013, 1022 (9th Cir. 2003). Blix Street Records’ claim
that Proskauer had a conflict of interest during the mediation because it had
wrongfully failed to produce documents Blix Street Records had provided, in the
district court’s words, “requires a leap of fancy” to support a conspiracy to induce
Blix Street Records into a disadvantageous settlement. Moreover, Blix Street
Records could not even identify which documents Proskauer supposedly failed to
produce.
6. Because we affirm the award of summary judgment in favor of
Proskauer, we also affirm the subsequent award of fees and interest to the firm.
AFFIRMED.
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