Brian D'AmAto v. Regina Lillie

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NOT FOR PUBLICATION OCT 28 2010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
BRIAN D’AMATO; PAUL D’AMATO, No. 08-35888
as partners of Sisbro I, Sisbro II, and
Sisbro III, D.C. No. 2:06-cv-00314-EFS
Plaintiffs - Appellants,
v. MEMORANDUM *
REGINA LILLIE; GERALD LILLE, as
partners of Sisbro I, Sisbro II, and Sisbro
III,
Defendants - Appellees.
BRIAN D’AMATO; PAUL D’AMATO, No. 08-35980
as partners of Sisbro I, Sisbro II, and
Sisbro III, D.C. No. 2:06-cv-00314-EFS
Plaintiffs - Appellees,
v.
REGINA LILLIE; GERALD LILLE, as
partners of Sisbro I, Sisbro II, and Sisbro
III,
Defendants - Appellants.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
BRIAN D’AMATO, as partner of Sisbro No. 09-35966
I, Sisbro II, and Sisbro III; PAUL
D’AMATO, as partners of Sisbro I, Sisbro D.C. No. 2:06-cv-00314-EFS
II, and Sisbro III,
Plaintiffs - Appellants,
v.
REGINA LILLIE, as partner of Sisbro I,
Sisbro II, and Sisbro III; GERALD
LILLE, as partner of Sisbro I, Sisbro II,
and Sisbro III,
Defendants - Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Edward F. Shea, District Judge, Presiding
Argued and Submitted June 10, 2010
Seattle, Washington
Before: CANBY, CALLAHAN and IKUTA, Circuit Judges.
This consolidated appeal concerns three family-owned limited partnerships
which own and operate a chain of hair salons in Washington and Idaho. In No. 08-
35888, Paul D’Amato and Brian D’Amato (“the D’Amatos”) raise several
challenges to the district court’s handling of their breach of contract action against
Gerald Lillie and Regina Lillie (“the Lillies”). The D’Amatos also appeal the
district court’s award of attorneys’ fees to the Lillies in No. 09-35966. In No. 08-
35980, the Lillies cross-appeal on several grounds in the event that we grant the
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D’Amatos any relief in No. 08-35888. The district court had jurisdiction pursuant
to 28 U.S.C. § 1332, and we have jurisdiction pursuant to 28 U.S.C. § 1291. The
parties are familiar with the facts and we do not repeat them here except as
necessary to explain our decision. We affirm the judgment in No. 08-35888, and
consequently dismiss No. 08-35980 as moot, but we vacate the district court’s
order in No. 09-35966 and remand for clarification of the attorneys’ fees award.
No. 08-35888
The D’Amatos first challenge the district court’s denial of their two motions
for summary judgment on the question whether the Lillies breached the three
limited partnership agreements (“the Agreements”). Although we normally lack
jurisdiction to review the denial of a motion for summary judgment after a full trial
on the merits, that general rule does not apply where the appellant argues that “the
district court made an error of law that, if not made, would have required the
district court to grant the motion.” Banuelos v. Constr. Laborers’ Trust Funds for
S. Cal., 382 F.3d 897, 902 (9th Cir. 2004). Nonetheless, it is unnecessary for us to
resolve the question whether that exception applies here, because any error in
denying the D’Amatos’ motion for summary judgment was rendered harmless by
the jury’s finding that the Lillies breached the Agreements.
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Similarly, any error in the introduction at trial of extrinsic evidence of the
contracting parties’ intent was harmless in light of the jury’s finding of breach.1
Moreover, much of the challenged evidence was independently admissible to prove
damages.
We also conclude that the jury instruction on the Lillies’ theory of unjust
enrichment was proper under Washington law.2 The D’Amatos argue that, in light
of the valid, express contracts governing the partnerships, an unjust enrichment
recovery was unavailable to the Lillies. The D’Amatos rely upon Young v. Young,
191 P.3d 1258 (Wash. 2008) (en banc), where the Washington Supreme Court
stated that “[u]njust enrichment is the method of recovery for the value of the
1
“A party seeking reversal for evidentiary error must show that the error
was prejudicial, and that the verdict was ‘more probably than not’ affected as a
result.” Boyd v. City & County of San Francisco, 576 F.3d 938, 943 (9th Cir.
2009) (quoting McEuin v. Crown Equip. Corp., 328 F.3d 1028, 1032 (9th Cir.
2003)).
2
On appeal, the D’Amatos argue for the first time that Idaho law should
govern the resolution of this issue. The D’Amatos waived reliance on Idaho law
by failing to argue in the district court that Idaho law governed the availability of
an unjust enrichment recovery. See, e.g., Loya v. Starwood Hotels & Resorts
Worldwide, Inc., 583 F.3d 656, 666 (9th Cir. 2009); Babb v. Schmidt, 496 F.2d
957, 960 (9th Cir. 1974).
We generally review civil jury instructions for abuse of discretion, but we
review de novo the question whether the legal requirements underlying the jury
instruction were satisfied. Voohries-Larson v. Cessna Aircraft Co., 241 F.3d 707,
713 (9th Cir. 2001). We also review questions of state law de novo. Ortiz v. Bank
of Am. Nat’l Trust & Sav. Ass'n, 852 F.2d 383, 386 (9th Cir. 1987).
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benefit retained absent any contractual relationship because notions of fairness
and justice require it.” Id. at 1262 (emphasis added). But while Young sought to
“conceptually clarify” the law of unjust enrichment and quantum meruit, it did not
purport to change the existing law of unjust enrichment. See id. at 1261. The
passage in Young upon which the D’Amatos rely is simply a more succinct
expression of the Washington high court’s previously established rule that “[a]
party to a valid express contract is bound by the provisions of that contract, and
may not disregard the same and bring an action on an implied contract relating to
the same matter, in contravention of the express contract.” Chandler v. Wash. Toll
Bridge Auth., 137 P.2d 97, 103 (Wash. 1943) (emphasis added). Here, the
contested instruction required the jury to find that the Lillies conducted work
outside of the scope of the contract ER286, so the unjust enrichment offset to the
jury’s damages award did not “relat[e] to the same matter” as the express
Agreements. Id. at 103; see also Pierce County v. State, 185 P.3d 594, 618-19
(Wash. Ct. App. 2008). Therefore, we find no error in the district court’s unjust
enrichment instruction.
The D’Amatos next argue that the district court erred in refusing to instruct
the jury on the fiduciary duties of general partners. Any error in failing to give this
instruction was harmless. The jury found that the Agreements were breached, and
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the D’Amatos acknowledged in the district court that their damages would have
been exactly the same under a breach of fiduciary duties theory.
The D’Amatos also argue that the district court erred in dismissing part of
their breach of contract claims as time-barred.3 Specifically, the D’Amatos argue
that the district court should have tolled the statute of limitations under the
discovery rule. Under the discovery rule, “the cause of action accrues when the
plaintiff discovers, or in the reasonable exercise of diligence should discover, the
elements of the cause of action.” 1000 Va. Ltd. P’ship v. Vertecs Corp., 146 P.3d
423, 428 (Wash. 2006) (en banc). The district court properly applied the mailbox
rule in presuming that the D’Amatos received partnership financial statements
mailed by the Lillies, see Olson v. The Bon, Inc., 183 P.3d 359, 363 (Wash. Ct.
App. 2008), and did not clearly err in concluding that those statements were
sufficient to put a reasonable person on notice that the Lillies were paying
themselves salaries exceeding those authorized by the Agreements.
3
We review de novo the district court’s dismissal of claims on statute of
limitations grounds. Lukovsky v. City & County of San Francisco, 535 F.3d 1044,
1047 (9th Cir. 2008). However, where “the accrual of the statute of limitations in
part turns on what a reasonable person should have known, we review this mixed
question of law and fact for clear error.” Rose v. United States, 905 F.2d 1257,
1259 (9th Cir. 1990).
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Accordingly, we affirm the judgment in No. 08-35888, and we dismiss the
Lillies’ cross-appeal in No. 08-35980 as moot.
No. 09-35966
The D’Amatos also challenge the district court’s order designating the
Lillies the prevailing party and awarding them attorneys’ fees and costs related to
the defense of the limited partnership SISBRO III, which is organized in Idaho.4
The district court did not abuse its discretion under Idaho law in designating
the Lillies the prevailing party, despite the jury’s verdict that the Lillies breached
the SISBRO III Agreement. In a similar situation, the Idaho Supreme Court
upheld a trial court’s determination that the defendant was the prevailing party
where the verdict was in favor of the plaintiff, but the plaintiff was awarded only
nominal damages, rather than the $250,000-plus damages sought. See Odziemek v.
Wesely, 634 P.2d 623, 623-24 (Idaho 1981). Here, not only were the D’Amatos
awarded no net damages, but the district court also dismissed many of their claims.
4
We review for abuse of discretion the district court’s award of attorneys’
fees under state law, although we review the district court’s interpretation and
application of the relevant state statute de novo. Kona Enters., Inc. v. Estate of
Bishop, 229 F.3d 877, 883 (9th Cir. 2000). We review underlying factual
determinations for clear error. Fischel v. Equitable Life Assur. Soc’y of U.S., 307
F.3d 997, 1005 (9th Cir. 2002).
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The D’Amatos also challenge the district court’s decision to award
attorneys’ fees for work benefitting the defense of all three limited partnerships,
rather than awarding only those fees that were accrued solely for the defense of
claims relating to SISBRO III. The district court’s method of calculating the
amount of the attorneys’ fees award was proper. “The calculation of the amount of
the award of attorney fees is committed to the sound discretion of the district
court.” Mihalka v. Shepherd, 181 P.3d 473, 479 (Idaho 2008). Idaho Rule of Civil
Procedure 54(e)(3) instructs trial courts to consider eleven specific factors in
determining the amount of an award of attorneys’ fees, plus “[a]ny other factor
which the court deems appropriate in the particular case.” Idaho R. Civ. Pro
54(e)(3)(L). Rule 54(e)(3) does not require that an award of attorneys’ fees be
narrowly limited to work implicating only matters of Idaho law, and neither the
D’Amatos nor we have identified any Idaho case imposing such a limitation on the
trial court’s discretion. Nor did the district court err in considering that some work
done for SISBRO I and SISBRO II fairly benefitted SISBRO III, as an additional
“appropriate” factor under Rule 54(e)(3)(L). The district court’s conclusion that
much of the work of the Lillies’ attorneys benefitted the defense of either all three
partnerships or SISBRO III in particular was not clearly erroneous. Thus, in
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principle, the district court did not err in determining what portion of the Lillies’
attorneys’ fees to award.
The district court’s order, however, does not clearly state the amount of the
award. The district court indicated that the Lillies requested $288,488.85 in
attorneys’ fees. ER921. The district court first stated that “[d]efense attorney fees
in the sum of $215,933.33 shall be taxed as costs.” ER920. The order later stated,
however, that it would be “reasonable to reduce the claimed hours by fifty percent
in order to award reasonable attorney fees spent to defend claims relating to
SISBRO III,” ER923 which would suggest an award of $144,244.43. Nonetheless,
in the following paragraph, the district court awarded $215,963.40, which it
indicated reflected the elimination of one specific disputed fee, plus a twenty-five
percent reduction of the resulting total. ER924 & n.2. Then, in the order’s
conclusion, the court ordered, without further explanation, that the “Clerk of Court
shall tax $161,950.00 in defense fees as costs.” ER924.
Neither we nor the parties are able to discern the amount of the Lillies’
attorneys’ fees award from the district court’s order. Accordingly, we vacate the
attorneys’ fee award and remand to the district court to clarify the amount of the
Lillies’ attorneys’ fees to be taxed against the D’Amatos as costs, as well as its
reasoning for arriving at that amount.
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The judgment in No. 08-35888 is AFFIRMED. The order in No. 09-35966
is VACATED and REMANDED to the district court with instructions. No. 08-
35980 is DISMISSED.
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