Opinion ID: 437332
Heading Depth: 3
Heading Rank: 2

Heading: The Palming Off Claim

Text: 17 The district court held Whittaker barred by laches and estoppel from recovering for pre-complaint acts of palming off, because Whittaker knew that Execuair was engaging in the allegedly improper conduct as early as June 1972 but delayed filing suit until 1977. Whittaker for the first time on appeal argues that Execuair had unclean hands, and that, in any event, the doctrines of laches and estoppel should not apply in a damages action. Legal arguments normally may not be raised for the first time on appeal, although this court has discretion to reach an issue if it would not cause the parties to develop new facts. Commodity Futures Trading Comm'n v. Co Petro Marketing Group, Inc., 680 F.2d 573, 581 (9th Cir.1982) (new issue considered on appeal, because it was purely one of statutory construction central to the case and important to the public); see United States v. Dann, 706 F.2d 919, 925 n. 5 (9th Cir.1983). 18 Unclean hands is partially a factual determination. We decline to reach the issue because Execuair might have developed the facts differently if unclean hands was raised below. We also decline to exercise our discretion to decide the issue of whether laches or estoppel applies to damages actions under California law, as we find no sufficiently compelling reason to decide Whittaker's contention at this juncture in derogation of the normal rule that arguments should be raised first at trial. 19 Whittaker contends that Execuair failed to show sufficient detrimental reliance for a claim of laches or estoppel. The district court found sufficient reliance in that Execuair continued its existing business practices, made capital investments to expand its business, acquired additional drawings and destroyed records of when drawings and parts were obtained by virtue of Whittaker's failure promptly to challenge Execuair's practices. Whittaker focuses only on the capital investment aspect of this reliance: the purchase of real estate, and the purchase of Whittaker parts and equipment for reconditioning the parts. There may be merit to Whittaker's contention that Execuair has failed to demonstrate prejudice by virtue of its real estate investments. The purchase of parts inventories and equipment or tooling, however, does tend to establish detrimental reliance, as these purchases were made to enable Execuair to expand its existing parts trade, a trade practiced in a manner Whittaker now claims constituted improper palming off. Moreover, Execuair was prejudiced because it continued engaging in its existing practices, incurring additional potential liability by reason of Whittaker's failure to take prompt action.