Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-15297/USCOURTS-ca9-14-15297-0/pdf.json

Parties Involved:
Chevron USA Inc.
Appellant
Transbay Auto Service, Inc.
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TRANSBAY AUTO SERVICE, INC., a

California corporation,

Plaintiff-Appellee,

v.

CHEVRON USA INC., a Delaware

corporation,

Defendant-Appellant.

No. 13-15439

D.C. No.

3:09-cv-04932-SI

TRANSBAY AUTO SERVICE, INC., a

California corporation,

Plaintiff-Appellee,

v.

CHEVRON USA INC., a Delaware

corporation,

Defendant-Appellant.

No. 14-15297

D.C. No.

3:09-cv-04932-SI

OPINION

Appeal from the United States District Court

for the Northern District of California

 Susan Illston, Senior District Judge, Presiding

Argued and Submitted

August 10, 2015—San Francisco, California

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2 TRANSBAY AUTO SERVICE V. CHEVRON USA

Filed November 30, 2015

Before: Alex Kozinski and Richard C. Tallman, Circuit

Judges, and Lawrence L. Piersol,* Senior District Judge.

Opinion by Judge Tallman;

Dissent by Judge Piersol

SUMMARY**

Rules of Evidence / Hearsay

Reversing the district court’s judgment, after a jury trial,

in an action under the Petroleum Marketing Practices Act, the

panel held that certain evidence was not hearsay and should

have been admitted as an adoptive statement.

The district court awarded the plaintiff almost half a

million dollars as compensation for overpaying for a gasoline

service station. The defendant contended that the station’s

$2.375 million price tag constituted a “bona fide offer” under

the Act.

The panel held that a third-party appraisal of the property

that valued it higher than either of the appraisals

commissioned by the parties was not hearsay, and should

* The Honorable Lawrence L. Piersol, Senior United States District

Judge for the District of South Dakota, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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TRANSBAY AUTO SERVICE V. CHEVRON USA 3

have been admitted into evidence as an adoptive statement

under Federal Rule of Evidence 801(d)(2)(B). Using the

“possession plus” test, the panel held that when a party acts

in conformity with the contents of a document ̄e.g., by

giving an independent appraisal to a lender in support of

accomplishing its objective to secure a commercial

loan ̄such an action constitutes an adoption of the

statements contained therein even if the party never reviewed

the document’s contents. The panel further held that such an

action constitutes an adoption even if the third party never

itself uses or relies on the document. Where, however, a

party forwards a document while acting as a mere messenger,

this does not constitute an adoption. The panel reversed the

district court’s judgment and remanded the case for a new

trial.

Dissenting, District Judge Piersol wrote that the

possession plus rule had not been adopted in this circuit at the

time of trial and should not be applied retroactively.

COUNSEL

David S. Ettinger (argued) and Mitchell C. Tilner, Horvitz &

Levy LLP, Encino, California; Robert C. Phelps, Glynn &

Finley, LLP, Walnut Creek, California, for DefendantAppellant.

Samuel T. Rees (argued) and Martin R. Fox, Bleau Fox, Los

Angeles, California, for Plaintiff-Appellee.

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4 TRANSBAY AUTO SERVICE V. CHEVRON USA

OPINION

TALLMAN, Circuit Judge:

The dispute before us stems from the multi-million dollar

purchase of a gasoline service station in the West Portal

neighborhood of San Francisco. Chevron USA Inc. contends

the station’s $2.375 million price tag constituted a “bona fide

offer” under the Petroleum Marketing Practices Act

(“PMPA”). TransbayAuto Service, Inc. rejects this argument

and urges us to preserve the jury verdict awarding it almost

half a million dollars as compensation for overpaying for the

property. We must decide whether the district court erred in

excluding at trial a third-party appraisal of the property that

valued it significantly higher than either of the appraisals

commissioned by the parties. We find this appraisal should

have been admitted as an adoptive statement under Federal

Rule of Evidence 801(d)(2)(B), and we reverse.

I

Beginning in the late 1930s, Chevron owned the land

located at 301 Claremont Boulevard in San Francisco,

California (the “property”). While the oil company initially

operated its own Chevron-branded service station there, over

the years it leased the service station to independent dealers

who continued to operate under the Chevron banner. These

independent dealers, known as franchisees, paid rent to

Chevron in exchange for the right to operate the service

station on the property.

In 2001, Chevron and Transbay—which is solely owned

by Mike Tsachres—entered into a service station franchise

relationship. At the time they entered into the franchise,

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TRANSBAY AUTO SERVICE V. CHEVRON USA 5

Chevron informed Transbay it intended to sell the property

sometime in the near future. In May 2008, Chevron

communicated to Transbay its intent to do so. Chevron

solicited bidsfrominterested purchasers. Transbaysubmitted

a bid in addition to two other companies. These bids ranged

from $1.2 to $1.9 million, with Transbay’s $1.8 million bid

falling in between.

1 Ultimately, none of these bids resulted

in a completed transaction for the disposition of the property. 

Chevron therefore opted to make what it deemed to be a

“bona fide offer” to sell the property to Transbay in

accordance with the PMPA. See 15 U.S.C.

§ 2802(b)(3)(D)(iii). “[A] bona fide offer under the PMPA

is measured by an objective market standard. To be

objectively reasonable, an offer must approach fair market

value.” Ellis v. Mobil Oil, 969 F.2d 784, 787 (9th Cir. 1992)

(quotation omitted).

To determine the property’s fair market value, Chevron

employed Deloitte Financial AdvisoryServices to conduct an

appraisal of the property. After learning that buildings in the

West Portal neighborhood are generally restricted to a height

limitation of twenty-six feet, Deloitte revised its initial

appraisal from $3.24 million to $2.386 million as the

property’s “highest and best use” for retail or commercial

space. In its revised appraisal, Deloitte deemed the property

worth $1.5 million if it continued to be operated as a service

station (a “going concern” valuation).

After Deloitte issued its revised appraisal, Chevron

offered to sell the property to Transbay as a branded station

1 One of the bidding companies, Highland, initially offered $2.5 million

for the property. It revised this bid to $1.9 million after an investigation

period.

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6 TRANSBAY AUTO SERVICE V. CHEVRON USA

for $2.386 million, or as an unbranded station for a slight

haircut at $2.375 million. On behalf of Transbay, Tsachres

accepted the unbranded offer under protest. In order to fund

this purchase, Tsachres sought financing from a bank. While

he faced rejection from almost all of the sixteen lenders he

approached, Tsachres obtained some traction with American

California Bank. This bank commissioned PropertySciences

Group to appraise the property, which valued it at $2.52

million as a going concern (“PSG Appraisal”). Tsachres

acknowledged the PSG Appraisal was conducted “for the

purposes of [his] loan application.” And he personally

participated in the process by providing financial information

and submitting to an interview with PSG’s appraiser. 

Although American California Bank ultimately declined to

extend a loan to Transbay, it provided Tsachres with a copy

of the PSG Appraisal.

Transbay then sought financing from California Pacific

Bank (“CPB”). CPB’s chairman instructed Tsachres,

“[w]hatever you have, bring them to me.” The parties dispute

whether Tsachres ever looked at the PSG Appraisal. But

there is no dispute that when Tsachres went to the bank to

apply for the loan, he provided the chairman with an envelope

containing the PSG Appraisal. According to Tsachres’s

testimony at trial, the chairman offered to make the loan on

the spot without looking at the envelope’s contents. 

Nevertheless, Tsachres did not obtain the final paperwork

approving his $1.782 million loan until three days later. After

purchasing the property from Chevron, Transbay entered into

a new partnership with Valero to re-brand the service station.

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TRANSBAY AUTO SERVICE V. CHEVRON USA 7

II

In 2009, Transbay filed a single cause of action against

Chevron for violating the PMPA by failing to make a bona

fide offer to sell the property. The district court denied

Chevron’s motion for summary judgment. In doing so, the

district court made evidentiary rulings to determine the

evidence it could consider in support of each party. After

finding the facts “conflicting as to whether Tsachres read,

understood, and acceded to the PSG Appraisal,” the district

court held:

For purposes of ruling on this evidentiary

objection, the Court need only decide whether

there is enough evidence for a jury reasonably

to conclude that the plaintiff adopted the

statement. On this record, there is enough

such evidence, albeit disputed. The Court

finds that the PSG Appraisal is admissible as

an adoptive admission and plaintiff’s

objections are overruled.

The district court adhered to this ruling during a colloquy

regarding the parties’ opening arguments when Transbay said

it would object to Chevron’s introduction of the PSG

Appraisal. Chevron referenced the district court’s previous

adoptive admission summaryjudgment ruling, after which the

district court stated, “I think that’s right.” When Chevron

argued that nothing had changed between the summary

judgment order and trial, the district court overruled

Transbay’s objection. As a result, Chevron discussed the

PSG Appraisal during its opening argument to the jury.

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8 TRANSBAY AUTO SERVICE V. CHEVRON USA

Critically—after a mid-trial voir dire of Tsachres outside

the presence of the jury—the district court changed its ruling

and did not permit Chevron to introduce the PSG Appraisal. 

During the voir dire, Tsachres testified he never reviewed the

PSG Appraisal before giving it to CPB. The district court

rejected Chevron’s efforts to impeach Tsachres with his

deposition testimony:

2

“[T]he only evidence is that he didn’t

read these materials. . . . There’s no contrary evidence. . . . 

I don’t think the deposition said that he read those materials,

if that’s what you’re saying.” The district court consequently

deemed the PSG Appraisal inadmissible, ruling that “I just

think on the state of this record it doesn’t come in as an

adoptive admission.”

Without the PSG Appraisal, the parties presented the jury

with three valuations: (1) Chevron’s revised $2.386 million

appraisal if the property was operated at its “highest and best

use”; (2) Transbay’s $1.8 million appraisal—created for

litigation purposes—if the property continued to operate as a

service station; and (3) Chevron’s revised $1.5 million

appraisal if the property continued to operate as a service

2 During the voir dire, Chevron read Tsachres’s deposition testimony

into the record:

Question: All right. Have you seen this appraisal

before, that we’ve marked as Exhibit 106?

Answer: As I mentioned earlier, they gave it to me, but

this bank when they reject it they give me this package.

Question: All right. And so did you see a copy of this

appraisal that we’ve marked as Exhibit 106 prior to

when you closed on the deal?

Answer: Yes.

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TRANSBAY AUTO SERVICE V. CHEVRON USA 9

station.3In addition, Transbay proffered an attorney land use

expert who testified that the process to convert the property

from a service station to a retail or commercial use would

cost approximately $500,000 and take several years due to a

specific San Francisco zoning ordinance.4 The jury also

learned about the various bids submitted on the property.

After a four-day trial, the jury returned a verdict in favor

of Transbay and awarded it $495,000 in damages. Chevron

subsequently filed a motion for, among other relief, a new

trial based on the district court’s exclusion of the PSG

Appraisal. The district court’s denial of this motion reiterated

its bench order, finding that no evidence “indicated that Mr.

Tsachres actually read the contents of the PSG Appraisal.” 

It justified the departure from its earlier admission ruling on

the basis that at the summary judgment stage there had not

yet been an evidentiary hearing. The propriety of the district

court’s denial of Chevron’s post-verdict motion is now before

us on appeal.

3 The jury also learned about Chevron’s initial “highest and best use”

appraisal, as well as its initial going concern appraisal.

 

4

 “No owner of a property used as an Automotive Service Station shall

change the use of the property to a different type of use without first

applying for and receiving either a Conditional Use authorization fromthe

City Planning Commission, or a conversion determination from the

Zoning Administrator. Such authorizations shall be in addition to any

other permit or authorization required for a proposed service station

conversion under any applicable City, State or [F]ederal law or

regulation.” San Francisco, Cal., S.F. PlanningCode § 202.5(c)(1) (2015)

(limitation on conversions of automotive service stations) (formerly

§ 228(c)(1) (2012)).

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10 TRANSBAY AUTO SERVICE V. CHEVRON USA

III

“[W]e review de novo the district court’s construction of

hearsay rules, but review for abuse of discretion the court’s

determination to admit hearsay evidence.” United States v.

Marguet-Pillado, 560 F.3d 1078, 1081 (9th Cir. 2009). With

respect to adoptive admissions, “the district court must first

find that sufficient foundational facts have been introduced

for the jury reasonably to conclude that the defendant did

actually [adopt] the statement.” United States v. Monks,

774 F.2d 945, 950 (9th Cir. 1985) (addressing adoptive

admission by silence). “[I]t’s not a question of the court

weighing the evidence at this time and deciding whether the

showing is strong or weak. The court merely needs to decide

that there is a substantial enough showing to present the issue

to the jury for them to perform that weighing function.” 

United States v. Gil, 58 F.3d 1414, 1420 (9th Cir. 1995)

(alteration omitted) (quoting unpublished district court

opinion) (admitting drug ledgers found in defendant’s

possession).

IV

As a matter of first impression, we hold that when a party

acts in conformity with the contents of a document—e.g., by

giving an independent appraisal to a lender in support of

accomplishing its objective to secure a commercial

loan—such an action constitutes an adoption of the

statements contained therein even if the party never reviewed

the document’s contents. We further hold that such an action

constitutes an adoption even if the third-party never itself

uses or relies on the document. Where, however, a party

forwards a document while acting as a mere messenger, this

does not constitute an adoption.

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TRANSBAY AUTO SERVICE V. CHEVRON USA 11

A

Rule 801(d)(2)(B) dictates that statements adopted by a

party-opponent do not constitute hearsay:

(d) Statements That Are Not Hearsay. A

statement that meets the following conditions

is not hearsay:

(2) An Opposing Party’s Statement. The

statement is offered against an opposing party

and:

(B) is one the party manifested that it adopted

or believed to be true[.]

Fed. R. Evid. 801(d)(2)(B).

We use the “possession plus” test to determine adoption. 

See United States v. Pulido-Jacobo, 377 F.3d 1124, 1132

(10th Cir. 2004) (“[W]e do adopt the ‘possession plus’

standard articulated by the . . . Ninth Circuit[.]” (citations

omitted)). This standard is derived from our decision in

United States v. Ospina, 739 F.2d 448 (9th Cir. 1984). In

Ospina, as evidence of the defendant’s participation in a drug

conspiracy, the government sought to introduce two business

cards with notations written on the back with the location of

the drug transfer and the address of his co-conspirators’ hotel. 

Id. at 451. We held these business cards admissible under

Rule 801(d)(2)(B) not only because they were in the

defendant’s possession, but because “Ospina acted on the

information written on the cards when he traveled to the

address written there to pick up the cocaine.” Id. We

emphasized the significance of the defendant’s possession

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12 TRANSBAY AUTO SERVICE V. CHEVRON USA

plus his additional act of travel in reliance on the business

cards’ notations. See id.

While it is well settled there must be evidence of adoption

“beyond mere possession,” United States v. Carrillo, 16 F.3d

1046, 1049 (9th Cir. 1994), we have not yet addressed facts

analogous to the situation here where a party acted based on

the contents of a document, but without necessarilyreviewing

the document first. We and other courts have previously held

that a party who relies on a third-party document by

submitting the document to another—but after reviewing its

contents—constitutes an adoptive admission. In Sea-Land

Service, Inc. v. Lozen International, LLC, 285 F.3d 808, 821

(9th Cir. 2002), an employee adopted an internal

memorandum that had been e-mailed to her by copying the

entire body of the memorandum into her e-mail to another

and prefacing it with an inculpatory statement. Where the

inculpatory statement was clearly based on the contents of the

memorandum, the employee “incorporated and adopted the

contents of [the] original message because her remark

manifested an adoption or belief in the truth of the

information contained in the original e-mail.” Id. (quotation

omitted).

One of our sister circuits “ha[s] identified the correct

approach where documents are concerned as asking whether

the surrounding circumstances tie the possessor and the

document together in some meaningful way.” Pilgrim v. Trs.

of Tufts Coll., 118 F.3d 864, 870 (1st Cir. 1997) (quotation

omitted), abrogated on other grounds by Nat’l R.R.

Passenger Corp. v. Morgan, 536 U.S. 101 (2002). The First

Circuit deemed a grievance committee report adopted where

a university president—who had been provided the report by

the authoring committee—followed the “serious” action

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TRANSBAY AUTO SERVICE V. CHEVRON USA 13

recommended in the report by removing supervisory duties

from an employee’s allegedly discriminating boss. Id. The

president’s “acceptance of the contents of the [r]eport and his

implementation of its recommendations, without disclaimer,

served as an adoption of the [r]eport for the purposes of Rule

801([d])(2)(B).” Id. Similarly, in Grundberg v. Upjohn Co.,

137 F.R.D. 365, 366 (D. Utah 1991), the defendant

corporation manifested an adoption of a study conducted by

an affiliated, non-employee doctor by submitting it to the

FDA in an effort to obtain approval of a drug. To constitute

an adoptive admission, the action that a party takes in

conformity with the document need not be serious:

There is no doubt that where a party’s use of

a document supplied by another in fact

represents the party’s intended assertion of the

truth of the information therein, an adoptive

admission can be found. Situations of this

sort are most commonly encountered where

the party forwards the document to another in

response to some request (or perceived need)

for information of the sort contained in the

document.

White Indus., Inc. v. Cessna Aircraft Co., 611 F. Supp. 1049,

1062–63 (W.D. Mo. 1985) (citations omitted).

Thus, the only difference between existing case law and

the issue before us on appeal is whether the party personally

reviewed the third-party content before submitting it to

another. We find that this distinction has no import. To

illustrate why this distinction is irrelevant, a parallel may be

drawn to criminal cases. An individual who submits a false

loan application to a bank faces punishment if he was

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14 TRANSBAY AUTO SERVICE V. CHEVRON USA

willfully blind to the falsity of the contents of the application. 

See, e.g., United States v. Patela, 578 F. App’x 139, 144 (3d

Cir. 2014) (upholding willful blindness instruction given to

jury who convicted the defendant because “the jury could

reasonably infer that Patela deliberately failed to review

documents in order to distance himself from the fraud”);

United States v. Green, 648 F.3d 569, 582 (7th Cir. 2011)

(holding an “ostrich instruction” appropriate in mortgage

fraud and conspiracy case where Green “was aware that his

co-defendants had offered to obtain false documents for him

and that they had done so for others in the past,” “signed

blank loan applications,” and “never met some of the

individuals who he represented on his loan materials would

be renting the properties”); cf. United States v. 3814 NW

Thurman St., Portland, Or., A Tract of Real Prop., 164 F.3d

1191, 1196 (9th Cir. 1999), superseded by statute, 18 U.S.C.

§ 983(d) (2000) (“The innocent owner defense [to civil

forfeiture] does not apply, however, where the owner was

willfully blind to false statements made in a loan

application.”); United States v. Geisen, 612 F.3d 471, 475,

488 (6th Cir. 2010) (upholding conviction for making false

statements in order to keep a nuclear power station open, and

finding willful blindness instruction proper where “the

government presented ample evidence from which a rational

jury could infer that Geisen deliberately chose not to inform

himself in preparing the submissions to the [Nuclear

Regulatory Commission]”).

Therefore, a party who is only vaguely aware of the

contents of a document manifests an intent to adopt these

contents by using the document to accomplish an objective or

by acting in conformity with the document. See Grundberg,

137 F.R.D. at 370 (“Even if the person adopting the statement

had no personal knowledge or first hand information about

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TRANSBAY AUTO SERVICE V. CHEVRON USA 15

the reports, if a person manifests their acceptance of

information, the admission by adoption is admissible nonhearsay evidence.”). The Federal Rules bear out this

conclusion: “While knowledge of contents would ordinarily

be essential, this is not inevitably so. . . . Adoption or

acquiescence may be manifested in any appropriate manner.” 

Fed. R. Evid. 801(d)(2)(B) note. “A party may adopt a

written statement if the party uses the statement or takes

action in compliance [with] the statement.” 5 Jack B.

Weinstein & Margaret A. Berger, Weinstein’s Federal

Evidence § 801.31[3][b] (Joseph M. Laughlin ed., 2d ed.

2002), cited with approval in Sea-Land Serv., 285 F.3d at

821; see also Grundberg, 137 F.R.D. at 369 (“An adoptive

admission may be oral or written or by conduct.”). We

therefore embrace the First Circuit’s formulation of our

“possession plus” standard as it pertains to documents—we

do not look to whether the party has affirmatively reviewed

the document, but whether “the surrounding circumstancestie

the possessor and the document together in some meaningful

way.” Pilgrim, 118 F.3d at 870.

B

Here, on de novo review, we hold the district court

applied the incorrect standard. Rather than evaluate

Tsachres’s actions under the “possession plus” standard, the

district court limited the scope of Rule 801(d)(2)(B) to

whether the evidence established that Tsachres did “actually

hear, understand, and accede to the statement.”5In doing so,

5 The dissent asserts that we are improperly applying the “new

‘possession plus’ rule . . . retroactively.” Dissent at 20. But the

possession plus rule was not suddenly created for this case. As the Tenth

Circuit recognized more than ten years ago in Pulido-Jacobo, 377 F.3d at

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16 TRANSBAY AUTO SERVICE V. CHEVRON USA

the district court ignored the actions Tsachres took by

focusing solely on whether he had read the PSG Appraisal. 

Although the “hear, understand, and accede” language comes

from our oft-cited holding in Monks, 774 F.2d at 950, that

case is distinguishable because it examined whether the

defendant had adopted an oral statement by remaining silent. 

While Monks most certainly fits within our “possession plus”

standard, it is less applicable to adoptive admissions of

documents.

According to Tsachres’s trial testimony, he never opened

the envelope containing the PSG Appraisal. Nevertheless,

when CPB’s chairman called Tsachres and told him

“[w]hatever you have, bring them to me,” it is uncontradicted

that Tsachres knowingly brought the PSG Appraisal to CPB

and handed it to the chairman. At this point, Tsachres

manifested an intent to adopt the PSG Appraisal. He went to

the bank with the hope of inducing it to provide him with a

loan. As part of this inducement, he provided CPB with the

PSG Appraisal. Tsachres does not know whether CPB relied

upon the PSG Appraisal before finalizing the loan three days

later. But by providing the PSG Appraisal in a package of

materials upon which he knew the bank might rely when

deciding whether to make him the loan, he “manifested an

adoption or belief in the truth” of the PSG Appraisal. 

Sea-Land, 285 F.3d at 821.

Given his need for the money to buy the property,

Tsachres’s protest that he was a mere messenger rings

hollow. The situation therefore warranted submission of the

PSG Appraisal and his testimony to the jury to decide

whether his conduct amounted to an adoptive admission of

1132, the rule is derived from our 1984 decision, Ospina, 739 F.2d at 451.

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TRANSBAY AUTO SERVICE V. CHEVRON USA 17

the value of the land. He did not simply deliver information

on behalf of another entity. Instead, he had a vested interest

in supplying the PSG Appraisal. By providing the PSG

Appraisal in response to the chairman’s directive to bring all

supporting documents to the bank, Tsachres acted like the

“party [who] forwards the document to another in response to

some request (or perceived need) for information of the sort

contained in the document.” White Indus., 611 F. Supp. at

1063.

This record provides sufficient foundational facts for a

jury to reasonably conclude that Tsachres adopted the

valuation contained in the PSG Appraisal. While the district

court may believe that Tsachres did not actually do so, we

agree with the dissent that this is a credibility determination

with which the jury is tasked, not the judge. The PSG

Appraisal should have been admitted under Rule

801(d)(2)(B).

V

The PSG Appraisal—the only third-party appraisal

available—values the property higher than any other

appraisal and remarkably higher than any other goingconcern appraisal. We cannot say with any degree of

confidence that had the jury been presented with the PSG

Appraisal, it would have come to the same conclusion. We

therefore conclude the evidentiary error merits a new trial. 

Because we order a new trial, we need not reach the second

issue raised by Chevron on appeal that Transbay failed to

prove its case for damages.

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We vacate the district court’s Corrected and Consolidated

Final Judgment, and reverse and remand the case for a new

trial.

Costs are awarded to the Appellant.

REVERSED, VACATED, and REMANDED.

PIERSOL, Senior District Judge, dissenting:

I respectfully dissent. It is true that the trial court did not

apply the possession plus rule with regard to adopted

admissions. That rule was not adopted in the Ninth Circuit

until the majority opinion in this decision. At the mid-trial

voir dire, the trial judge heard Tsachres’ testimony that he

never reviewed the PSG Appraisal and found despite his

deposition testimony that there was no submissible issue to

present to the jury on whether or not the PSG Appraisal was

an adoptive admission. Neither the deposition nor the voir

dire testimony showed that Tsachres had read or otherwise

understood the contents of the PSG Appraisal. The trial court

had basis for its conclusion that the rule in the Ninth Circuit

required that Tsachres had read or otherwise understood the

contents of the PSG Appraisal. United States v. OrellanaBlanco, 294 F.3d 1143, 1148, n.10 (9th Cir. 2002) was relied

upon by the trial court, with that case quoting United States

v. Monks, 774 F.2d 945, 950 (9th Cir. 1985) (before letting in

evidence as an adoptive admission, “the district court must

find that sufficient foundational facts have been introduced

for the jury reasonably to conclude that the defendant did

actually hear, understand and accede to the statement.”) 

While Orellana-Blanco and Monks do both involve an oral

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TRANSBAY AUTO SERVICE V. CHEVRON USA 19

statement, the requirement of understanding and acceding is

common to oral information as well as written. See Sea-Land

Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808 (9th Cir. 2002)

(employee incorporated a memorandum into her own e-mail,

thus adopting its contents.) Here, the most that the record

indicates is that Mr. Tsachres saw the PSG Appraisal, that

being his deposition testimony, not that he read or understood

the appraisal. His voir dire testimony was that he did not

review the PSG Appraisal before giving it in the package he

received it in to California Pacific Bank. What Mr. Tsachres

did know was that American California Bank had refused him

a loan but did provide him with a copy of the PSG Appraisal. 

California Pacific Bank’s chairman then told Tsachres,

“[w]hatever you, have, bring them to me.” and he did.

Since the “possession plus” rule was not applied, it was

not an abuse of discretion for the trial court to find that there

was no submissible jury question of whether Tsachres

understood and acceded to the statements in the PSG

Appraisal. Had the “possession plus” rule been applied at

trial, then it would have been an abuse of discretion to not

submit the adoptive admission question to the jury pursuant

to Federal Rule of Evidence 104.

The majority opinion draws a parallel to criminal cases

involving willful blindness to the contents of a document. 

The willful blindness instruction presents that issue to a jury. 

The possession plus rule swallows that issue in holding that

when a party acts in conformity with the contents of a

document, such an action constitutes an adoption of the

statements therein even if the party never reviewed the

document's contents.

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20 TRANSBAY AUTO SERVICE V. CHEVRON USA

The “possession plus” rule had not been adopted in this

circuit at the time of trial. The new “possession plus” rule

should not be applied retroactively. Nunez-Reyes v. Holder,

646 F.3d 684, 694 (9th Cir. 2011)(en banc)(applyingChevron

Oil Co. v. Hudson, 404 U.S. 97 (1971) for pure prospectivity

in a civil case announcing a new rule of law in the circuit

with the new rule thus not applied to the pending petition for

review).

Accordingly, I respectfully dissent and would affirm.

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