T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on a nd i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T B R I AN D’ AMAT O; P AU L D’ AMAT O, a s pa r tne r s of

S i s br o I , S i s br o I I , a nd S i sbro II I, P l ai n t i ffs - A p p el l an t s, v. R E G IN A L IL L IE ; G E R A L D L IL L E , as partners of S i sbro I, S i sbro II , and S i sbro II I, D efen d an t s - A p p el l ees. N o. 08- 35888 D . C. N o . 2 : 0 6 - c v - 0 0 3 1 4 - EFS ME MOR AN DU M *

B R I AN D’ AMAT O; P AU L D’ AMAT O, a s pa r tne r s of

S i s br o I , S i s br o I I , a nd S i sbro II I, P l ai n t i ffs - A p p el l ees, v. R E G IN A L IL L IE ; G E R A L D L IL L E , as partners of S i sbro I, S i sbro II , and S i sbro II I, D efen d an t s - A p p el l an t s. N o. 08- 35980 D . C. N o . 2 : 0 6 - c v - 0 0 3 1 4 - EFS



# FI LED OC T 28 2010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

B R IA N D ’ A M A T O , as partner of S i sbro I , S i s b r o I I , a n d S i s b r o I I I ; P AU L D ’ A M A T O , as partners of S i sbro I, S i sbro II , and S i sbro II I, P l ai n t i ffs - A p p el l an t s, v. R E G IN A L IL L IE , as partner of S i sbro I, Si s b r o I I , a n d Si s b r o I I I ; GERALD L IL L E , as partner of S i sbro I, S i sbro II , and S i sbro II I, D efen d an t s - A p p el l ees. N o. 09- 35966 D . C. N o . 2 : 0 6 - c v - 0 0 3 1 4 - EFS

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe E a s t e rn D i s tr i c tof W a s hi ngt on E dw a r d F . S he a , D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d J une 10, 2010 S e a tt l e , W a s hi ngt on B efo re: C A N B Y , C A L L A H A N an d IK U T A , C i rcu i tJu d g es. T hi s c ons ol i da t e d appe a l c onc e rns thr e e f a m i l y - ow ne d l i m i t e d pa r tne r s hi ps w hi c h ow n a nd ope r a t e a c ha i n of ha i rs a l ons i n W a s hi ngt on a nd I da ho. I n N o. 08- 35 88 8, P aul D ’ A m at o and B ri an D ’ A m at o (“ the D ’ A m at os”) ra i se se vera l ch al l en g es t o th e d i stri ctco u rt ’ s h an d l i n g o f th ei r b reach o f co n tractact i o n ag ai n st G e r a l d L i l l i e a nd R e gi na L i l l i e ( “ the L i l l i e s ” ) . T he D ’ A m a t os a l s o appe a l the di s tr i c tc our t ’ s a w a r d of a tt orne y s ’ f

e e s t o the L i l l i e s i n N o. 09- 35966. I n N o. 08- 35980, the L i l l i e s c r os s - appe a l on s e ve r a l gr ounds i n the e ve nttha tw e gr a ntthe3

D ’ A m a t os a ny r e l i e f

i n N o. 08- 35888. T he di s tr i c tc our tha d j ur i s di c t i on pur s ua nt t o 28 U . S . C . § 1332, a nd w e ha ve j ur i s di c t i on pur s ua ntt o 28 U . S . C . § 1291. T he part i es ar e f

am i l i arw i th the fa ct s a nd w e do n otre peatthem here exce ptas ne c e s s a ry t o e xpl a i n ourde c i s i on. W e a f f i r m the j udgm e nti n N o. 08- 35888, a nd co n se q u en tl y d ism iss N o . 0 8 -3 5 9 8 0 as m o o t, b u t w e v ac ate th e d istrict co u rt’s or de ri n N o. 09- 35966 a nd r e m a nd f orc l a r i f i c a t i on of

the a tt orne y s ’ f

e e s a w a r d. N o. 08- 35888 T he D ’ A m a t os f

i r s tc ha l l e nge the di s tr i c tc our t ’ s de ni a l of the i rtw o m ot i ons for s um m ary j ud gm enton the qu es t i on w hether the L i l l i es brea ched the three l i m i t ed partners hi p agreements (“ the A gree m ent s” ). A l tho ug h w e norm al l y l ac k j uri sdi ct i on t o revi ew the deni al of a m ot i on for s um m ary j ud gm entaf t era f ul l tri al on the m e r i t s , tha tge ne r a l rul e doe s notappl y w he r e the appe l l a nta r gue s tha t“ the di s tr i c tc our tm a de a n e rr orof l a w tha t , i f

notm a de , w oul d ha ve r e qui r e d the di stri ctcourtt o g ra ntthe m ot i on . ” B anue los v . C ons tr . L abor e rs ’T r us t Funds f or S. C a l. , 3 8 2 F .3 d 8 9 7 , 9 0 2 ( 9 th C ir . 2 0 0 4 ) . N o n e th e le s s , it is u n n e c e s s a ry f o ru s to r e s o lv e th e q u e s tio n w h e th e rth a t e x c e p tio n ap p lie s h e r e , b e c a u s e a n y e rr o rin de ny i ng the D ’ A m a t os ’ m ot i on f ors um m a ry j udgm e ntw a s r e nde r e d ha r m l e s s by th e ju ry ’s f

in d in g th a t th e L illie s b r e a c h e d th e A g r e e m e n ts .“ A pa r ty s e e ki ng r e ve r s a l f ore vi de nt i a ry e rr orm us ts how tha tthe e rr or 1 w as p rej u d i ci al , an d th atth e v erd i ctw as ‘ m o re p ro b ab l y th an n o t ’ affected as a re sul t . ” B oyd v. C i t

y & C ou nt

y of Sa n Francisc o , 57 6 F . 3d 93 8, 94 3 (9th C i r. 2009) ( quot i ng McE u in v . C r o w n E q u ip . C o r p ., 32 8 F . 3d 10 28 , 10 32 (9th C i r. 2 0 0 3 ) ) . O n ap p e a l, th e D ’A m a to s a r g u e f o rth e f ir s t tim e th a t I d a h o la w s h o u ld 2 go vern the re sol ut i on of thi s i ss ue. T he D ’ A m at os w ai ved rel i ance on Idaho l aw by f a i l i ng t o a r gue i n the di s tr i c tc our ttha tI da ho l a w gove rne d the a va i l abi l i ty of a n u n ju s t e n r ic h m e n t r e c o v e ry . Se e , e . g. , L o y a v . S ta rw o o d

H o te ls & R e s o r ts W orldw i de, Inc. , 5 8 3 F .3 d 6 5 6 , 6 6 6 ( 9 th C ir . 2 0 0 9 ) ; B abb v . Sc hm i dt , 496 F . 2d 95 7, 96 0 (9th C i r. 19 74 ). We g e n e r a l l y r e v i e w c i v i l j u ry i n s tru c t i o n s f o rab u s e o f

d i s c r e t i o n , b u twe re vi ew de no vo the qu es t i on w hether the l egal re qu i re m ent s und er l yi ng the j ury in s tru c tio n w e r e s a tis f

ie d . V oohr i e s - L ars on v . C e s s na A i r c r af t C o. , 241 F . 3d 707, 713 ( 9th C i r . 2001) . W e a l s o r e vi e w que s t i ons of s t a t e l a w de novo. O r t i zv . B ank o f A m . N a t’ l T r u s t & Sa v . A s s 'n , 8 5 2 F .2 d 3 8 3 , 3 8 6 ( 9 th C ir . 1 9 8 7 ) . 4 S i m i l a r l y , a ny e rr ori n the i ntr oduc t i on a ttr i a l of e xtr i ns i c e vi de nc e of

the c ontr a c t i ng pa r t i e s ’ i nt e ntw a s ha r m l e s s i n l i ghtof the j ury ’ s f

i ndi ng of br e a c h. 1 M or e ove r , m uc h of

the c ha l l e nge d e vi de nc e w a s i nde pe nde nt l y a dm i s s i bl e t o pr ove d a m a g e s . W e al so co n cl u d e th atth e j u ry i n stru ct i o n o n th e L i l l i es’ th eo ry o f u n j u st e nr i c hm e ntw a s pr ope runde rW a s hi ngt on l a w . T he D ’ A m a t os a r gue tha t , i n l i ght 2 of the va l i d, e xpr e s s c ontr a c t s gove rni ng the pa r tne r s hi ps , a n unj us te nr i c hm e nt r e c ove ry w a s una va i l abl e t o the L i l l i e s . T he D ’ A m a t os r e l y upon Y oung v . Y

oung , 19 1 P . 3d 12 58 (W as h. 20 08 ) ( en banc), w here the W as hi ng t on S up re m e C ou rt s t a t e d tha t“ [ u] nj us te nr i c hm e nti s the m e thod of r e c ove ry f

orthe va l ue of

the5

be ne f i tr e t a i ne d abs e nt

any c ontr ac tual

r e lat i ons hi

p b ecau se n o t i o n s o f fai rn ess and j ust i ce re qu i re i t . ” I d. at12 62 (e m ph as i s a dd ed). B utw hi l e Y oungs o u g h t to

“ c onc e ptua l l y c l a r i f

y ” the l a w of

unj us te nr i c hm e nta nd qua ntum m e rui t , i tdi d not p u rp o r t to c h a n g e th e e x is tin g la w o f u n ju s t e n r ic h m e n t. Se e id . a t1261. T he pa s s a ge i n Y

oungup on w hi ch the D ’ A m at os re l y i s s i m pl y am ore s ucci nct expres si on of the W as hi ng t on hi gh court ’ s pre vi ou sl y e st abl i shed rul e that“ [a ] pa r ty t o a va l i d e xpr e s s c ontr a c ti s bound by the pr ovi s i ons of tha tc ontr a c t , a nd m a y n o t d is r e g a r d th e s a m e a n d b r in g a n a c tio n o n a n im p lie d c o n tr a c t r e la tin gto the sam e m at t er , i n con tra vent i on of the expres s c on tra ct . ” Ch a n d le rv . W a s h . T o ll B r i dge A uth. , 137 P . 2d 97, 103 ( W a s h. 1943) ( e m pha s i s a dde d) . H e r e , the cont es t ed i nstruct i on re qu i re d the j ury t o fi nd thatthe L i l l i es cond uct ed w ork o u ts id e o f

th e s c o p e o f

th e c o n tr a c t E R 286 , s o the unj us te nr i c hm e ntof f s e tt o the j u ry’ s d am ag es aw ard d i d n o t“ rel at [e] t o th e sam e m att er” as th e ex p ress A g r e e m e n ts . I

d. a t 1 0 3 ; s e e a ls o P ie r c e C o u n ty v . S ta te , 185 P . 3d 594, 618- 19 (W ash . C t . A p p . 2 0 0 8 ). T h erefo re, w e fi n d n o erro r i n th e d i stri ctco u rt ’ s u n j u st e n r ic h m e n t in s tru c tio n . T he D ’ A m at os nextar gu e thatthe di stri ctcourterre d i n ref usi ng t o i nstruct th e ju ry o n th e f

id u c ia ry d u tie s o f

g e n e r a l p a r tn e r s . A n y e rr o rin f a ilin g to g iv e th is i ns truc t i on w a s ha r m l e s s . T he j ury f ound tha tthe A gr e e m e nt s w e r e br e a c he d, a ndW e r e vi e w de novo the di s tr i c tc our t ’ s di s m i s s a l of c l a i m s on s t a tut e of 3 lim ita tio n s g r o u n d s . L ukovsk y v . C i t y & C ou nt

y of Sa n Francisc o , 535 F . 3d 1044, 1 0 4 7 ( 9 th C ir . 2 0 0 8 ) . H o w e v e r , w h e r e “th e a c c ru a l o f th e s ta tu te o f

lim ita tio n s in partturns on w hata r ea sonabl e per son sho ul d h ave kno w n, w e r evi ew thi s m i xed qu es t i on of l aw and factfor c l ea r e rr or. ” R ose v . U ni ted Stat es , 905 F . 2d 1257, 1 2 5 9 ( 9 th C ir . 1 9 9 0 ) . 6 the D ’ A m a t os a c know l e dge d i n the di s tr i c tc our ttha tthe i rda m a ge s w oul d ha ve b e e n e x a c tly th e s a m e u n d e ra b r e a c h o f f id u c ia ry d u tie s th e o ry . T he D ’ A m a t os a l s o a r gue tha tthe di s tr i c tc our te rr e d i n di s m i s s i ng pa r tof the i rbr e a c h of

c ontr a c tc l a i m s a s t i m e - ba rr e d. S pe c i f i c a l l y , the D ’ A m a t os a r gue 3 tha tthe di s tr i c tc our ts houl d ha ve t ol l e d the s t a tut e of l i m i t a t i ons unde rthe di s c ove ry rul e . U nde rthe di s c ove ry rul e , “ the c a us e of a c t i on a c c rue s w he n the pl a i nt i f f di s c ove r s , ori n the r e a s onabl e e xe r c i s e of di l i ge nc e s houl d di s c ove r , the el em ent s of the cause of a ct i on . ” 1000 V a. L td. P ’s hi

p v . V e r te c s C or

p. , 146 P . 3d 423, 428 ( W a s h. 2006) ( e n ba nc ) . T he di s tr i c tc our tpr ope r l y appl i e d the m a i l box ru le in p r e s u m in g th a t th e D ’A m a to s r e c e iv e d p a r tn e r s h ip f in a n c ia l s ta te m e n ts m a ile d b y th e L illie s , se e O l son v. T he B on , Inc. , 1 8 3 P .3 d 3 5 9 , 3 6 3 ( W a s h . C t. A pp . 20 08 ), and d i d n otcl ea rl y e rri n con cl ud i ng thattho se st at em ent s w er e s uf f i c i e ntt o puta r e a s onabl e pe r s on on not i c e tha tthe L i l l i e s w e r e pa y i ng th e m s e lv e s s a la r ie s e x c e e d in g th o s e a u th o r iz e d b y th e A g r e e m e n ts .W e rev i ew fo r ab u se o f d i scret i o n th e d i stri ctco u rt ’ s aw ard o f att o rn eys’ 4 f e e s unde rs t a t e l a w , a l though w e r e vi e w the di s tr i c tc our t ’ s i nt e rpr e t a t i on a nd ap p lic a tio n o f

th e r e le v a n t s ta te s ta tu te d e n o v o . Kona E nte rs . , I nc . v . Es tate of B is hop , 22 9 F . 3d 87 7, 88 3 (9th C i r. 20 00 ). W e r evi ew un derl yi ng fa ctual d e te r m in a tio n s f

o rc le a re rr o r . F is c he l

v . E qui tabl e L i

f e A s s ur . Soc ’

y of U . S. , 307 F .3 d 9 9 7 , 1 0 0 5 ( 9 th C ir . 2 0 0 2 ) . 7 A c c or di ngl y , w e a f

f i r m the j udgm e nti n N o. 08- 35888, a nd w e di s m i s s the L illie s ’ c r o s s - ap p e a l in N o . 0 8 - 3 5 9 8 0 a s m o o t. N o. 09- 35966 T he D ’ A m a t os a l s o c ha l l e nge the di s tr i c tc our t ’ s or de rde s i gna t i ng the L illie s th e p r e v a ilin g p a r ty a n d a w a r d in g th e m a tto rn e y s ’ f e e s a n d c o s ts r e la te d to the de f e ns e of the l i m i t e d pa r tne r s hi p S I S B R O I I I , w hi c h i s or ga ni z e d i n I da ho. 4 T he di s tr i c tc our tdi d notabus e i t s di s c r e t i on unde rI da ho l a w i n de s i gna t i ng the L i l l i es the prevai l i ng party, despi t e the j ury’ s ver di ctthatthe L i l l i es brea ched the S IS B R O II I A gree m ent . In a s i m i l arsi tuat i on , the Idaho S up re m e C ou rt u p h e ld a tr ia l c o u r t’s d e te r m in a tio n th a t th e d e f e n d a n t w a s th e p r e v a ilin g p a r ty w h e r e th e v e r d ic t w a s in f a v o ro f th e p la in tif

f , b u t th e p la in tif

f w a s a w a r d e d o n ly n o m in a l d a m a g e s , r a th e rth a n th e $ 2 5 0 ,0 0 0 - p lu s d a m a g e s s o u g h t. See O dzi em ek v. W e s e ly , 634 P . 2d 623, 623- 24 ( I da ho 1981) . H e r e , notonl y w e r e the D ’ A m a t os a w a r d e d n o n e t d a m a g e s , b u t th e d is tr ic t c o u r t a ls o d is m is s e d m a n y o f th e irc la im s .8

T he D ’ A m at os al so chal l enge the di stri ctcourt ’ s dec i si on t o aw ar d att o rn eys’ fees fo r w o rk b en efi tt i n g th e d efen se o f al l th ree l i m i t ed p artn ersh i p s, r a the rtha n a w a r di ng onl y thos e f e e s tha tw e r e a c c rue d s ol e l y f orthe de f

e ns e of c l a i m s r e l a t i ng t o S I S B R O I I I . T he di s tr i c tc our t ’ s m e thod of c a l c ul a t i ng the a m ountof

the a tt orne y s ’ f

e e s a w a r d w a s pr ope r . “ T he c a l c ul a t i on of the a m ountof the aw ar d o f a tt orney f

ee s i s c om m i tt ed t o the soun d d i sc re t i on of the di stri ct court . ” Mi halka v . She

phe r d, 1 8 1 P .3 d 4 7 3 , 4 7 9 ( I d a h o 2 0 0 8 ) . I d a h o R u le o f C iv il P r o c e d u r e 5 4 ( e ) ( 3 ) in s tru c ts tr ia l c o u r ts to c o n s id e re le v e n s p e c if ic f a c to r s in de t e r m i ni ng the a m ountof a n a w a r d of

a tt orne y s ’ f

e e s , pl us “ [ a ] ny othe rf

a c t or w hi ch the courtdeem s app ropri at e i n the part i cul arca se . ” I daho R . C i v. P ro 54( e ) ( 3) ( L ) . R ul e 54( e ) ( 3) doe s notr e qui r e tha ta n a w a r d of a tt orne y s ’ f

e e s be na rr ow l y l i m i t e d t o w or k i m pl i c a t i ng onl y m a tt e r s of I da ho l a w , a nd ne i the rthe D ’ A m a t os norw e ha ve i de nt i f i e d a ny I da ho c a s e i m pos i ng s uc h a l i m i t a t i on on the tri al court ’ s di sc re t i on . N or di d the di stri ctcourterr i n con si deri ng thatsom e w ork do ne for S IS B R O I a nd S IS B R O II fa i rl y benef i tt ed S IS B R O II I, as an addi t i on al

“ approp ri at e” fa ct or un der R ul e 54(e)( 3)(L ). T he di stri ctcourt ’ s c on cl usi on that m uch o f the w ork o f the L i l l i es ’ att orneys benefi tt ed the defense of ei ther a l l three p a r tn e r s h ip s o rS I S B R O I I I in p a r tic u la rw a s n o t c le a r ly e rr o n e o u s . T h u s , in9

p ri n ci p l e, th e d i stri ctco u rtd i d n o terr i n d et erm i n i n g w h atp o rt i o n o f th e L i l l i es’ a tto rn e y s ’ f

e e s to a w a r d . T he di s tr i c tc our t ’ s or de r , how e ve r , doe s notc l e a r l y s t a t e the a m ountof the a w a r d . T h e d is tr ic t c o u r t in d ic a te d th a t th e L illie s r e q u e s te d $ 2 8 8 ,4 8 8 .8 5 in a tto rn e y s ’ f

e e s . E R 9 2 1 . T he di stri ctcourtfi rs tst at ed that“ [d] ef ense att orney f

ee s i n the sum of $2 15 , 93 3. 33 shal l be t axed as cost s. ” E R 920. T he or de rl a t e rs t a t e d, how e ve r , tha ti tw oul d be “ r e a s onabl e t o r e duc e the c l a i m e d hour s by f i f ty pe r c e nt in o r d e rto a w a r d r e a s o n ab le a tto rn e y f e e s s p e n t to d e f

e n d c la im s r e la tin g to S IS B R O II I, ” E R 923 w h i ch w o u l d su g g estan aw ard o f $ 1 4 4 , 2 4 4 . 4 3 . N o n eth el ess, in th e f o llo w in g p a r a g r ap h , th e d is tr ic t c o u r t a w a r d e d $ 2 1 5 ,9 6 3 .4 0 , w h ic h it i ndi c a t e d r e f

l e c t e d the e l i m i na t i on of one s pe c i f

i c di s put e d f

e e , pl us a tw e nty - f

i ve p e r c e n t r e d u c tio n o f

th e r e s u ltin g to ta l. E R 924 & n . 2. T h en , i n th e o rd er ’s concl usi on , the courtordered, w i tho utfurther e xp l anat i on , thatthe “ C l erk o f C ou rt shal l t ax $1 61 , 95 0. 00 i n d ef ense fe es as cost s. ” E R 924 . N ei th er w e n o r th e p art i es are ab l e t o d i scern th e am o u n to f th e L i l l i es’ a tt orne y s ’ f

e e s a w a r d f

r om the di s tr i c tc our t ’ s or de r . A c c or di ngl y , w e va c a t e the a tt orne y s ’ f

e e a w a r d a nd r e m a nd t o the di s tr i c tc our tt o c l a r i f y the a m ountof

the L i l l i es’ att o rn eys’ fees t o b e t ax ed ag ai n stth e D ’ A m at o s as co st s, as w el l as i t s r e a s o n in g f

o ra rr iv in g a t th a t a m o u n t.10

T h e j u d g m en ti n N o . 0 8 -3 5 8 8 8 i s A F F I R M E D . T he or de ri n N o. 09- 35966 i s V AC AT E D a nd RE MAND E D t o th e d i stri ctco u rtw i th i n stru ct i o n s. N o. 08- 3 5 9 8 0 i s DI S MI S S E D.