NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: ASSET RESOLUTION, LLC, 

Debtor, 

______________________________ 

WILLIAM A. LEONARD, Jr., Chapter 7 

Trustee, 

Plaintiff-Appellee, 

 v. 

OXBOW INVESTMENT HOLDINGS, 

LLC, a California limited liability company, 

Defendant-Appellant.

No. 17-16799 

D.C. Nos. 09-32824-rcj 

16-01064-rcj 

MEMORANDUM*

Appeal from the United States Bankruptcy Court

for the District of Nevada

Robert Clive Jones, District Judge, Presiding

Argued and Submitted December 19, 2018

San Francisco, California

Before: BOGGS,** PAEZ, and OWENS, Circuit Judges.

 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The Honorable Danny J. Boggs, United States Circuit Judge for the 

U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

FILED

FEB 1 2019

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 17-16799 

Appellant Oxbow Investment Holdings (“Oxbow”) appeals from a judgment 

of the United States District Court for the District of Nevada that granted specific 

performance of a contract for the sale of a bankruptcy-estate asset—a 27-acre piece 

of land in San Bernardino County, California (“the Property”). 

In 2015, Appellee William Leonard (“Leonard”), the bankruptcy trustee,

entered into a contract to sell the Property to Oxbow for $825,000. The parties’ 

attorneys negotiated and memorialized the contract on a form document with an 

Addendum substituting certain terms, particularly “Acceptance.” 

Acceptance means the time the offer or final counter offer 

is accepted in writing by a Party, subject only to any 

agreed upon contingencies, including but not limited to the 

requirement of a court order authorizing the sale of the 

Property and the completion of any required overbid or 

auction process, and such acceptance is delivered to and 

personally received by the other Party or the Party’s 

authorized agent in accordance with the terms of this offer 

or a final counter offer.

Upon Acceptance, Leonard had five days to provide a preliminary title report 

and make certain disclosures to Oxbow. The dispute over the contract revolves 

around Paragraph 13.A.(1), which states: 

A. Within the time specified in paragraph 19 [5 days], if 

Seller has actual knowledge, Seller shall provide to 

Buyer, in writing, the following information: 

(1)LEGAL PROCEEDINGS: Any lawsuits by or 

against Seller, threatening or affecting the Property, 

including any lawsuits alleging a defect or 

deficiency in the Property or common areas, or any 
3 17-16799 

known notices of abatement or citations filed or 

issued against the Property. 

Within fifteen days of acceptance, Oxbow had to complete any investigations, 

review the disclosures, and accept the condition of the property. The contract 

identified the above items as the primary contingencies to sale, as well as court 

approval and completion of any required overbid. At the end of the fifteen-day 

period, Oxbow was required to either remove the applicable contingencies or cancel 

the agreement. The contract stated that, by removing the contingencies, Oxbow had 

elected to proceed with the transaction.

Oxbow and Leonard signed the contract on June 23, 2015. Fifteen days later, 

Jonathan Dabbieri, Leonard’s counsel, contacted Oxbow to clarify that the fifteenday period was about to expire and inquired whether Oxbow wished to proceed with 

the transaction on a non-contingent basis. After some back-and-forth about 

Oxbow’s deposit, Oxbow’s principal, Eric Cernich, sent Dabbieri e-mails on July 17 

and 23 stating that the transaction was noncontingent. The district court entered an 

order approving the sale on August 3, 2015. 

Shortly before the parties were to close escrow in August 2015, Cernich sent 

an e-mail requesting an additional sixty days to address issues he had recently 

discovered in soil and geotechnical reports on the Property. Cernich explained that 

he would not close without additional time and attempted to cancel the contract, 

although he said he would rescind the cancellation if he received more time. 
4 17-16799 

Dabbieri responded and notified Cernich that, because Oxbow had removed 

all contingencies, failure to close would breach the contract. Dabbieri reminded 

Cernich that “as you will recall” San Bernardino County had filed a Motion for 

Relief from the automatic bankruptcy stay so the County could proceed with a tax 

foreclosure sale of the Property because the property taxes were in arrears. He also 

explained to Cernich that, depending on the response from the district court and the 

County, Leonard was willing to provide more time. 

Ultimately in November 2015, the parties agreed on the following plan. 

Oxbow would increase its deposit from $25,000 to $50,000, and the deposit would 

be provided to the County and credited to Oxbow’s purchase. The County would 

continue its hearing on the Motion. Oxbow agreed to close escrow by the end of 

February 2016. 

Escrow did not close, and in April 2016, Leonard filed suit alleging breach of 

contract and seeking specific performance. Oxbow asserted affirmative defenses of 

(1) failure to state a claim; (2) failure of condition precedent; (3) estoppel; (4) failure 

to mitigate damages; (5) unjust enrichment; and (6) failure of condition. It also 

reserved the right to raise additional defenses upon discovery of grounds to do so. 

After a bench trial, the district court ruled that Oxbow had breached the contract. 

Oxbow appeals, arguing that: (1) Leonard breached the contract by failing to 

disclose the County’s Motion for Relief; (2) the district court erred by excluding 
5 17-16799 

certain testimony from Cernich; and (3) the extended time and additional deposit 

constituted a novation. 

We review a district court’s factual findings for clear error, In re the Vill. at 

Lakeridge, LLC, 814 F.3d 993, 1002 (9th Cir. 2016), and interpretation of a contract 

de novo. Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 681 (9th Cir. 2009). A 

district court’s evidentiary rulings are reviewed for an abuse of discretion. United 

States v. Rohrer, 708 F.2d 429, 432 (9th Cir. 1983). The parties agree that California 

law controls the contract’s interpretation. We affirm the district court’s ruling. 

1. Oxbow argues that the district court incorrectly interpreted Paragraph 

13.A.(1)1 of the contract to conclude that, as a matter of law, Leonard was not 

required to disclose the County’s Motion. Oxbow insists that Paragraph 13.A.(1) 

required Leonard to disclose the Motion because it was a “legal proceeding.” Even 

assuming the Motion is a legal proceeding, as the district court concluded, Oxbow’s 

argument prevails only if the heading identifies Leonard’s disclosure obligations, 

 

1 Before the district court and in its briefs, Oxbow has consistently maintained 

that Paragraph 13.A.(1) required Leonard to disclose the Motion. It is not apparent 

from the record that Oxbow has ever asserted that any other portion of the contract 

required disclosure. In the last minute of its rebuttal at oral argument, Oxbow 

suggested that a different provision of the contract concerning subsequent 

disclosures required Leonard to disclose the Motion. Because Oxbow did not raise 

this argument below, it has waived it. See McKay v. Ingleson, 558 F.3d 888, 891 

n.5 (9th Cir. 2009) (concluding that an argument first raised during oral argument 

was waived “[b]ecause [it] was not raised clearly and distinctly in the opening 

brief”). 
6 17-16799 

not the terms following the heading. 

We “read and construe[]” a heading with the language of the contractual term. 

Coit v. Jefferson Standard Life Ins. Co., 168 P.2d 163, 169 (Cal. 1946). Paragraph 

13 identifies disclosure obligations. Each term has a heading in large caps that 

identifies a general topic, such as “legal proceedings,” “neighborhood problems,” or 

“zoning issues.” The heading is followed by a more detailed description in ordinary 

type. Reading the contract as a whole, see Cal. Civ. Code § 1641, demonstrates that 

the items to be disclosed follow the heading because the entire contract follows the 

same pattern. See Huverserian v. Catalina Scuba Luv, Inc., 110 Cal. Rptr. 3d 112, 

115–16 (Ct. App. 2010). The heading “legal proceedings” may be construed 

consistently with the more specific terms that follow because lawsuits are a type of 

legal proceeding. See Coit, 168 P.2d at 169; see also Nygard, Inc. v. Uusi-Kerttula, 

72 Cal. Rptr. 3d 210, 223 (Ct. App. 2008) (“[W]here specific words follow general 

words in a contract, ‘the general words are construed to embrace only things similar 

in nature to those enumerated by the specific words.’” (quoting Cal. Farm Bureau 

Fed’n v. Cal. Wildlife Conservation Bd., 49 Cal. Rptr. 3d 169, 189 (Ct. App. 2006))). 

Therefore, the contract only required Leonard to disclose the items listed in 

Paragraph 13.A.(1), not all legal proceedings. Because the Motion for Relief is not 

a lawsuit or any of the other listed items, the district court did not err in concluding 

that, as a matter of law, Leonard was not required to disclose it.
7 17-16799 

2. At trial, Oxbow attempted to raise fraud as a defense, arguing that Leonard 

obtained its consent to the contract through material omissions, namely Leonard’s 

failure to disclose the Motion. In support of this argument, Oxbow sought to have 

Cernich testify that, had he known about the Motion, he would not have agreed to 

purchase the Property because he would have waited to buy it for a cheaper price at 

the tax sale. The district court refused to allow this testimony because Oxbow had 

not raised fraud as a defense.

A party must state its affirmative defenses or it has waived them. Fed. R. Civ. 

P. 8(c); see Fed. R. Bankr. P. 7008 (making Fed. R. Civ. P. 8 applicable in 

proceedings before a bankruptcy court). Oxbow did not raise fraud in its answer, or 

any defense that could liberally be construed as such. Because Oxbow did not raise 

this defense, it was waived. See In re Adbox, Inc., 488 F.3d 836, 841 (9th Cir. 2007). 

The district court did not abuse its discretion by refusing to allow Oxbow to 

introduce testimony in support of a defense it had not raised in its answer. 

3. Oxbow argues that the arrangement culminating in an additional deposit 

was a novation because Oxbow had timely cancelled the contract and the additional 

deposit served as new consideration. 

The district court ruled that there was no novation. Whether parties entered 

into a novation depends on the facts and circumstances of each case. Olympic Fin. 

Co. v. Thyret, 337 F.2d 62, 66 (9th Cir. 1964). Under California law, a novation 
8 17-16799 

occurs when the parties to an agreement substitute a new obligation between the 

same parties with an intent to extinguish the old one. Cal. Civ. Code § 1531. A 

novation requires: (1) a previous valid obligation; (2) that all parties agree to the new 

contract; (3) that the old contract is extinguished; and (4) a valid new contract. 

Olympic Fin. Co., 337 F.2d at 65 (citing Young v. Benton, 131 P. 1051, 1052 (Cal. 

Dist. Ct. App. 1913)). The key factor in distinguishing between contractual 

modification and novation is whether the obligee intended to release the obligor from

his obligation under the original agreement. Alexander v. Angel, 236 P.2d 561, 563 

(Cal. 1951). 

Oxbow argues that it timely canceled the contract, based on its interpretation 

that the Addendum term defining Acceptance meant that Acceptance, which 

triggered the fifteen-day due diligence period, did not occur until after the district 

court approved the sale. The plain language of the Addendum states that Acceptance 

took place when a party accepted the offer in writing—subject to certain agreedupon contingencies. Based upon this language, the district court correctly concluded 

that Acceptance occurred on June 23, 2015, the day the parties signed the contract.2 

Cernich’s cancellation was conditioned on whether he received more time to 

 

2 Oxbow essentially conceded as much at oral argument when it insisted that 

because the parties signed the contract on June 23, 2015, Leonard was required to 

disclose the Motion by June 28. Any obligation that Leonard had to disclose 

information to Oxbow, according to Paragraph 19.A of the contract, only took place 

5 days after “Acceptance.”
9 17-16799 

resolve the issues with the Property, and Leonard provided it. Oxbow ultimately 

received well over sixty days even before the parties set a new deadline for closing. 

Leonard consistently maintained that Oxbow was bound by the original agreement. 

See Alexander, 236 P.2d at 564. Finally, the essential terms of the contract did not 

change. Oxbow increased its deposit and consented to its release to pay accrued 

taxes, but the deposit was credited to the purchase price, and the contract always 

contemplated that Leonard would use the purchase price to pay accrued property 

taxes. The district court did not err in concluding that there was no novation.

AFFIRMED.