Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-00445/USCOURTS-caed-2_08-cv-00445-1/pdf.json

Parties Involved:
Mary Abbott
Plaintiff
Chris Okoye
Defendant

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28 This matter is deemed suitable for decision without oral *

argument. E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

Mary Abbott,

 Plaintiff,

 v.

Chris Okoye, 

 Defendant.

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2:08-cv-00445-GEB-DAD

ORDER GRANTING DEFENDANT’S

MOTION FOR SUMMARY JUDGMENT*

Defendant moves for summary judgment under Federal Rule of

Civil Procedure 56 on Plaintiff’s breach of contract claim. The motion

concerns whether the terms of a settlement agreement entered into

between the parties in a Nevada state court proceeding precluded

Defendant from subsequently filing a related lawsuit in California state

court. Defendant argues they did not; therefore, no breach of contract

has occurred. For the reasons stated below, Defendant’s summary judgment

motion is GRANTED. 

I. LEGAL STANDARD

A party seeking summary judgment bears the initial burden of

demonstrating the absence of a genuine issue of material fact for trial.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If this burden is

satisfied, “the non-moving party must set forth, by affidavit or as

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otherwise provided in [Federal] Rule [of Civil Procedure] 56, specific

facts showing that there is a genuine issue for trial.” T.W. Elec.

Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th

Cir. 1987)(quotations and citation omitted)(emphasis omitted). All

reasonable inferences that can be drawn from the evidence “must be drawn

in favor of the non-moving party.” Bryan v. McPherson, 608 F.3d 614,

619 (9th Cir. 2010).

When the defendant is the moving party and is seeking summary

judgment on one or more of plaintiff’s claims, 

“[The defendant] has both the initial burden of

production and the ultimate burden of persuasion on

[the motion]. In order to carry its burden of

production, the [defendant] must either produce

evidence negating an essential element of the

[plaintiff’s claim] or show that the [plaintiff]

does not have enough evidence of an essential

element to carry its ultimate burden of persuasion

at trial. In order to carry its ultimate burden of

persuasion on the motion, the [defendant] must

persuade the court that there is no genuine issue

of material fact.”

Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d

1099, 1102 (9th Cir. 2000)(citations omitted). 

II. REQUEST FOR JUDICIAL NOTICE

Plaintiff requests judicial notice be taken of multiple

documents that were filed in Nevada and California state court

proceedings between the parties. (Pl.’s Req. for Jud. Notice in Opp. to

Mot. for Summ. J. (“RJN”), Ex. A; SUF #3.) Defendant filed a Statement

of Non-Opposition to this request. 

A district court may take judicial notice of a fact that is

“not subject to reasonable dispute” because “it is either (1) generally

known within the territorial jurisdiction of the trial court or (2)

capable of accurate and ready determination by resort to sources whose

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accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).

“[P]roceedings in other courts, both within and [outside of] the federal

judicial system, if [they] have a direct relation to matters at issue”

may be judicially noticed. United States ex rel. Robinson Rancheria

Citizens Council v. Boreno, Inc., 971 F.2d 244, 248 (9th Cir. 1992)

(taking judicial notice of California Superior Court decision). Since

the documents sought to be judicially noticed are directly related to

this action, Plaintiff’s request for judicial notice is granted.

III. UNDISPUTED FACTS

Defendant obtained a $351,102 judgment for legal malpractice

against George Abbott in October of 1991. (Pl.'s Resp. to Def.'s

Statement of Undisputed Facts ("SUF") #1.) Defendant registered the

judgment in Nevada, but "let it lapse." (Id. 2.) Defendant renewed the

judgment in California in 1998, where it remains valid and unsatisfied.

(RJN, Ex. A; SUF #3.) 

In 2005, George Abbott received $501,267.55 in legal fees from

a Nevada probate proceeding, and he assigned those funds to the Abbott

Family Trust, of which Plaintiff is the trustee. (Id. 4.) Defendant then

commenced an action in Nevada against Plaintiff, George Abbott, and the

Abbott Family Trust (the “Abbotts”) alleging fraudulent transfer, civil

conspiracy, and other claims. (Id. 5.) Defendant moved for summary

judgment in the Nevada proceeding, and the Abbotts moved to dismiss the

Complaint. (RJN, Ex. D 1:16-23.) The Nevada court granted Defendant’s

summary judgment motion on his fraudulent transfer claim but declined to

order the relief requested since the Nevada state judgment had expired.

(Id. 10:16-20; SUF #6.) The Nevada court also granted the Abbott’s

dismissal motion except as to Defendant’s fraudulent transfer and civil

conspiracy claims, and held, inter alia: “the cause of action for civil

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conspiracy and its attendant damages remain the only trial issues in

this case.” (Id. 9:12-14, 10:21-23.)

After the Nevada court ruled on the parties’ respective

motions, the parties executed, and the court entered, a “Stipulation

for Settlement; Order Thereon” (the “Settlement Agreement”), which was

filed on September 14, 2005. (RJN, Ex. E.) The Settlement Agreement

contains the following four provisions:

1. The court's order of summary judgment

dated June 16, 2005 shall be entered as the final

judgment and order of this Court. 

2. The sole remaining claim unresolved by

the Court's order of summary judgment, civil

conspiracy, shall be dismissed, with prejudice,

upon payment of $2,000.00 from the Abbotts to Mr.

Okoye. In Signing this Stipulation and making the

payment, the Abbotts make no admission that they

actually engaged in a civil conspiracy and the

Court makes no finding with regard to that claim. 

3. The November 1, 2005 trial date is hereby

vacated in accordance with the foregoing. 

4. Each party agrees to pay their own

attorney's fees and costs.

(Id.) The $2,000 was paid, and Defendant dismissed the remainder of the

Nevada court case. (SUF #11.) 

Defendant commenced a new action against the Abbotts in

California state court alleging fraudulent transfer and other claims

approximately one month after dismissing the Nevada litigation. (RJN,

Ex. F.) Defendant obtained default judgments against the Abbotts in the

California action in January of 2006. (RJN, Ex. H.) The Abbotts

challenged the default judgments, which were ultimately upheld by the

California Court of Appeal. (Pl.’s Compl. ¶¶ 16-21; SUF #14.) 

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Plaintiff then filed the instant federal action, in which she

alleges five state law claims. (Pl.’s Compl.) Defendant moved to dismiss

Plaintiff’s Complaint for lack of subject matter jurisdiction under

Federal Rule of Civil Procedure (“Rule”) 12(b)(1), and for failure to

state a claim under Rule 12(b)(6). (Def.’s Mot. to Dismiss, ECF 6.)

Defendant’s dismissal motion for lack of subject matter jurisdiction was

granted on April 30, 2008, based upon the Rooker-Feldman doctrine.

(Order May 1, 2008, ECF 10.) Plaintiff appealed the dismissal order,

which the Ninth Circuit affirmed in part, and vacated and remanded in

part. Abbott v. Okoye, 364 Fed.Appx. 327 (9th Cir. 2010). The Ninth

Circuit held the Rooker-Feldman doctrine barred all of Plaintiff’s

claims except her breach of contract claim. Id. 

IV. DISCUSSION

The parties dispute whether or not Defendant breached the

Settlement Agreement by filing a subsequent action in California state

court. Defendant argues “there is simply no provision within [the

Settlement Agreement] which in any way precluded [him] from pursuing

[his] fraudulent transfer claim in a California court;” therefore, no

breach of contract has occurred. (Def.’s Mem. of P.&A. in Supp. of Mot.

for Summ. J. (“Mot.”) 6:1-2, 7:4-6.) Plaintiff rejoins that she

“believed” that by entering into the Settlement Agreement, “the case was

settled forever, and she would not be exposed to [future]

litigation....” (Pl.’s Brief in Opp’n to Mot. for Summ. J. (“Opp’n”)

2:17-22.) Plaintiff further contends the Settlement Agreement contained

an implied covenant of good faith and fair dealing and an implied

covenant not to sue, which Defendant breached by filing the California

litigation, and the doctrine of res judicata barred Defendant from

filing his California action. (Id. 6:24-7:1, 7:15-26, 8:1-3, 9:20-24.)

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This decision may be cited under Ninth Cir. Rule 36-3(b). 1

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A. Choice of Law

Defendant contends Nevada law governs the instant motion.

(Mot. 6 n.1.) Plaintiff did not address the choice of law issue in her

opposition. 

The basis of jurisdiction in this case is diversity. A federal

court sitting in diversity jurisdiction “must look to the forum state’s

choice of law rules to determine the controlling substantive law. Patton

v. Cox, 276 F.3d 493, 495 (9th Cir. 2002). In California, contracts are

to be interpreted “according to the law and usage of the place where it

is to be performed; or, if [the contract] does not indicate a place of

performance, according to the law and usage of the place where it is

made.” Cal. Civ. Code § 1646; see Frontier Oil Corp. v. RLI Ins. Co.,

153 Cal.App.4th 1436,1459-60 (2007); Pacific West Group, Inc. v. Real

Time Solutions, Inc., 321 Fed.Appx. 566, 569 (9th Cir. 2008) . “A 1

contract indicates a place of performance within the meaning of section

1646 if the intended place of performance can be gleaned from the nature

of the contract and its surrounding circumstances.” Frontier Oil Corp.,

153 Cal.App.4th at 1450. The contract need not expressly specify a place

of performance. Id. 

Here, the Settlement Agreement was intended to be performed in

Nevada since it concerned the settlement and dismissal of a Nevada state

court action. Therefore, Nevada state law governs its interpretation.

B. Breach of Contract

Under Nevada law, the construction and enforcement of a

settlement agreement are governed by principles of contract law. May v.

Anderson, 119 P.3d 1254, 1275 (2005). The elements of a breach of

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contract claim in Nevada are: 1) the existence of a valid contract, 2)

a breach by the defendant, and 3) damage as a result thereon. Saini v.

International Game Tech., 434 F.Supp.2d 913, 919-20 (D. Nev. 2006). The

“failure to perform one’s obligations within the express terms of [the

contract]” constitutes a breach of contract. Id. at 923.

“[W]hen a contract is clear on its face, it will be construed

from the written language and enforced as written. The court has no

authority to alter the terms of an unambiguous contract.” Canfora v.

Coast Hotels and Casinos, Inc., 121 P.3d 599, 603 (2005). Further,

parole evidence generally cannot be used to vary or contradict the terms

of an unambiguous written contract. Kaldi v. Farmers Ins. Exchange, 21

P.3d 16, 21 (2001). 

In this case, the Settlement Agreement is the only contract,

which forms the basis of Plaintiff’s breach of contract claim. (Pl’s

Compl. ¶ 24; Aff. of Michael K. Johnson in Supp. of Def.’s Mot. for

Summ. J., Ex. 1, 2:25-4:5.) The Settlement Agreement consists of only 4

provisions, none of which addresses Defendant’s ability to prosecute

future litigation. (RJN, Ex. E.) Plaintiff does not dispute Defendant’s

contention that no express term of the Settlement Agreement prohibited

Defendant from filing his California action. Instead, she argues her

“reasonable expectations” were that “she was forever free of the claims

of [Defendant].” (Opp’n 7:3-9.) However, since the terms of the

Settlement Agreement are clear, the Court cannot alter them. “Had

[Defendant] agreed not to sue[,] the agreement would have so stated.”

American Bank Stationary v. Farmer, 799 P.2d 1100, 1103 (1990)(the

Nevada Supreme Court held a written agreement between a former employee

and employer, which did not expressly waive the former employee’s right

to sue, did not prohibit him from doing so). 

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Since Defendant has not failed to perform his obligations

under the express terms of the Settlement Agreement, he did not breach

the contract. Therefore, Defendant has negated an essential element of

Plaintiff’s breach of contract claim.

C. Implied Covenants

Plaintiff argues Defendant’s summary judgment motion should be

denied because the Settlement Agreement contained an implied covenant

not to sue and an implied covenant of good faith and fair dealing.

(Opp’n 6:13-16, 7:17-19.) Plaintiff contends Defendant breached both of

these implied covenants by filing his California lawsuit. (Id. 6:24-7:1,

7:24-26.)

Under both Nevada and California law, a claim for breach of

the implied covenant of good faith and fair dealing is separate from a

breach of contract claim. Cohen-Breen v. Gray Television Group, Inc.,

661 F.Supp.2d 1158, 1171 (D. Nev. 2009)(quoting J.A. Jones Constr. Co.

V. Lehrer McGovern Bovis, Inc., 89 P.3d 1009, 1016 (2004))(“Under Nevada

law, a breach of the implied covenant of good faith and fair dealing

occurs where ‘the terms of the contract are literally complied with but

one party to the contract deliberately countervenes the intention and

spirit of the contract.’”); Racine & Laramie, Ltd. v. Dept. of Parks &

Rec., 11 Cal.App.4th 1026, 1031-32 (1992)(Under California law, “the

covenant is implied as a supplement to the express contractual

covenants, to prevent a contracting party from engaging in conduct which

(while not technically transgressing the express covenants) frustrates

the other party's rights to the benefits of the contract.”)(quotation

omitted)(emphasis in original).

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Here, Plaintiff did not allege a breach of the implied

covenant of good faith and fair dealing claim in her Complaint.

Therefore, she cannot rely upon such a claim to oppose Defendant’s

summary judgment motion. See Wasco Products, Inc. v. Southwall

Technologies, Inc., 435 F.3d 989, 992 (9th Cir. 2006)(plaintiffs seeking

to toll statute of limitations based on an ongoing conspiracy could not

raise tolling argument for first time in opposition to summary judgment

motion when conspiracy not alleged in complaint). Further, Plaintiff has

not shown that a covenant not to sue is implied into settlement

agreements under California or Nevada law, or that it would not have to

be plead as a separate claim to be relied upon in opposition to

Defendant’s summary judgment motion.

D. Res Judicata

Plaintiff also argues in her opposition that dismissal of

Defendant’s Nevada action was an adjudication on the merits, which

precluded Defendant from filing his California lawsuit. (Opp’n 8:1-3.)

Plaintiff has not shown how this argument is relevant to the instant

motion, however, since res judicata is an affirmative defense under both

Nevada and California law, which was appropriate to raise in the

California proceedings. Schwartz v. Schwartz, 591 P.2d 1137, 1139

(1979)(“Res judicata is an affirmative defense that must be specifically

pleaded.”); Barragan v. Banco BCH, 188 Cal.App.3d 283, 296 (1987)(“[R]es

judicata is an affirmative defense that may be waived....”). Moreover,

Plaintiff is challenging the California state court judgment by making

this argument, and federal courts lack subject matter jurisdiction over

such de facto appeals of state court proceedings under the RookerFeldman doctrine. Kougasian v. TMSL, Inc. 359 F.3d 1136, 1139 (9th Cir.

2004)(“Rooker-Feldman prohibits a federal district court from exercising

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subject matter jurisdiction over a suit that is a de facto appeal from

a state court judgment.”).

V. CONCLUSION

For the reasons stated above, Defendant has shown the absence

of a genuine issue of material fact for trial. Therefore, Defendant’s

summary judgment motion is GRANTED.

Dated: August 12, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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