Honolulu Data Entry Project v. D. Bello Associates

FILED
NOT FOR PUBLICATION
JAN 12 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
HONOLULU DATA ENTRY PROJECT, No. 14-16940
LTD., DBA HDEP International,
D.C. No. 1:12-cv-00467-BMK
Plaintiff-counter-
defendant-Appellee,
MEMORANDUM*
v.
D. BELLO ASSOCIATES,
Defendant-counter-claimant-
Appellant,
DOUGLAS W. BELLO; JEFFREY A.
BATES,
Defendants-Appellants.
HONOLULU DATA ENTRY PROJECT, No. 14-16964
LTD., DBA HDEP International,
D.C. No. 1:12-cv-00467-BMK
Plaintiff-counter-
defendant-Appellant,
v.
D. BELLO ASSOCIATES,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Defendant-counter-claimant-
Appellee,
DOUGLAS W. BELLO; JEFFREY A.
BATES,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Hawaii
Barry M. Kurren, Magistrate Judge, Presiding
Argued and Submitted October 11, 2017
Honolulu, Hawaii
Before: SCHROEDER, D.W. NELSON, and McKEOWN, Circuit Judges.
This appeal and cross-appeal stem from the acrimonious break up of a
business relationship that began with a handshake in 1991. After a lengthy trial,
the patient District Court sorted through the various claims and counter-claims and
issued amended findings of fact and conclusions of law in 2014. Central to the
dispute were three agreements: the original “Oral Agreement,” a 2012
“Commission Agreement,” and a “Partial Settlement Agreement” also executed in
2012. The District Court, inter alia, awarded D. Bello Associates (“DBA”) lost
revenues of approximately $1,217,000 for breach of the Commission Agreement
by Honolulu Data Entry Project, Ltd. (“HDEP”). This was the result of HDEP’s
failure to live up to a continuing obligation to pay DBA commissions after
2
termination of the Oral Agreement. The parties had agreed to divide their revenues
in the 2012 Commission Agreement. The revenues were received for performing
services on joint customer contracts, and the Commission Agreement allocated
approximately 85% of the revenues to HDEP and 15% of the revenues to DBA.
The District Court further held that DBA breached the non-competition provision
of the Partial Settlement Agreement and that HDEP was entitled to 85% of the
revenues DBA was continuing to receive from North Dakota Guaranty & Title
Company (“NDGT”). The District Court denied HDEP’s defamation and unfair
competition claims. The court also held that each party should bear its own costs,
and denied HDEP’s motion for attorney’s fees. We affirm in all respects.
DBA challenges both the District Court’s determination that it breached the
Partial Settlement Agreement, and the 85% revenue award to HDEP as damages
for the breach. During litigation, a dispute had arisen over acquiring business from
existing customers, and the parties executed the Partial Settlement Agreement,
permitting them to pursue “[n]ew [b]usiness . . . without having to account to the
other.” “New business” was defined as “[s]ervices first performed for any of the
[c]ustomers in a new [c]ounty.” Although there had been a recent joint contract
with NDGT, after executing the Partial Settlement Agreement, DBA entered a new
contract with NDGT to perform policy work in North Dakota. Because HDEP had
3
not yet performed the policy work under the parties’ original joint contract for
NDGT, DBA asserts that the policy work was new business. We must interpret the
Partial Settlement Agreement according to its plain terms and as a whole. See Cho
Mark Oriental Food, Ltd. v. K & K Int’l, 836 P.2d 1057, 1064 (Haw. 1992)
(citation omitted). That agreement defined new business to be business in a new
county. The NDGT policy work was therefore not new business because it was
performed in North Dakota, not in a new county. The District Court thus did not
err in determining that DBA breached the Partial Settlement Agreement.
Further, the District Court did not abuse its discretion in awarding revenues
to HDEP, in accordance with the parties’ revenue division agreement, for DBA’s
breach of the Partial Settlement Agreement. The revenue division was also the
basis for the award of damages to DBA for HDEP’s breach of the Commission
Agreement. Although DBA now contends HDEP’s damages should have been
based on actual lost profits, not the revenue agreement, DBA waited until its
motion to amend to argue that the award could not be based on revenues.
Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 2001) (“A district
court does not abuse its discretion when it disregards legal arguments made for the
first time on a motion to amend[.]”) (citation omitted). Since the District Court’s
award was based on the parties’ own agreed upon division governing receipt of
4
revenue, and DBA continues to view such division as an appropriate basis of the
award to DBA for HDEP’s breach of the Commission Agreement, we conclude
there is no basis for reversal of the award to HDEP for breach of the Partial
Settlement Agreement.
In its cross-appeal, HDEP disputes the District Court’s award of
commissions to DBA. Through the Commission Agreement, DBA received
commission payments from HDEP for DBA’s sales and marketing efforts, as well
as for some ongoing work DBA performed on joint customer contracts. The
Commission Agreement required HDEP to “continue to pay [DBA] commissions
for the duration of [the joint customer] contracts.” The District Court therefore
awarded commissions to DBA for the written joint customer contracts to which
DBA was a named party until those contracts expired or were terminated, and for
the oral contracts that HDEP converted into written contracts until the date those
written contracts were executed. This “most reasonably reflect[ed] the intent of the
parties” in this case. Univ. of Haw. Prof’l Assembly ex rel. Daeufer v. Univ. of
Haw., 659 P.2d 720, 724 (Haw. 1983) (citation omitted). HDEP could not, by
ending its Oral Agreement with DBA, terminate DBA’s contractual obligation to
provide the joint customers services in exchange for payment. Moreover, to the
extent that DBA failed to perform obligations under the joint customer contracts, it
5
was prevented from doing so by HDEP’s exclusion of DBA from ongoing business
related to the contracts. Thus, the District Court did not err in holding that the
Commission Agreement required HDEP to continue paying DBA commissions
from the joint customer contracts.
HDEP also cross-appeals the District Court’s denial of its defamation claim.
To sustain a defamation claim, a plaintiff must show, inter alia, “a false and
defamatory statement concerning another[.]” Gold v. Harrison, 962 P.2d 353, 359
(Haw. 1998) (citation omitted). To determine whether statements are false and
defamatory, Hawaii courts apply a three-part test that includes a requirement that,
to be a defamatory statement rather than an opinion, the statement in question must
be susceptible of being proved true or false. Id. at 360 (citation omitted).
DBA’s statement that HDEP “began an aggressive and surprising push to
seize control of The Title Team partnership and joint business” is not susceptible
of being proved true or false, because whether conduct is aggressive or surprising
depends upon an individual’s subjective opinion. Cf. Unelko Corp. v. Rooney, 912
F.2d 1049, 1054–55 (9th Cir. 1990) (holding the statement that a product “didn’t
work” was capable of being proved true or false and was thus sufficiently factual to
be defamatory). The same principle applies to the statement that HDEP’s errors in
reported data “greatly” concerned DBA. Moreover, the statement regarding errors
6
could not have been wholly false since both parties admit that there were indeed
errors in HDEP’s reported data. The remaining allegedly false and defamatory
statements were either statements of opinion or were entitled to qualified privilege
as relating to common contractual business interests of the parties and the
customers. See Russell v. Am. Guild of Variety Artists, 497 P.2d 40, 44 (Haw.
1972) (citations omitted).
Next, HDEP cross-appeals the District Court’s denial of its unfair methods
of competition claim in connection with DBA’s breach of the Partial Settlement
Agreement. The alleged unfair competition was the breach itself and did not
involve conduct that was “independently unlawful, unfair, or fraudulent.”
Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1152 (9th Cir. 2008);
Kapunakea Partners v. Equilon Enters. LLC, 679 F. Supp. 2d 1203, 1211 (D. Haw.
2009) (citation omitted).
Finally, DBA appeals the District Court’s determination that neither party
prevailed and that each should bear its own costs. The District Court did not err.
Neither party prevailed because each party partially won and lost on each of the
main issues. See Food Pantry, Ltd. v. Waikiki Bus. Plaza, Inc., 575 P.2d 869, 879
(Haw. 1978) (identifying main issues raised in pleadings and proof of case and
determining which party prevailed on each principal issue).
7
AFFIRMED.
8