Opinion ID: 715365
Heading Depth: 2
Heading Rank: 3

Heading: Summary Judgment on Schneider's Negligent Misrepresentation Claim.

Text: 15 Despite its holding restricting an auditor's liability for general negligence to its clients, the Bily court identified a further narrow class of persons who, although not clients, may reasonably come to receive and rely on an audit report..... Id. at 406-7. Such specifically intended beneficiaries of audit reports, the court held, may recover on a theory of negligent misrepresentation. Id. 16 However, under Bily, in order for a third-party to recover on a negligent misrepresentation theory, he must establish that the defendant: 1) made a representation; 2) with the intent to induce the plaintiff to act in reliance upon it; 3) in a specific transaction that the defendant intended to influence. Id. at 408-10. The Bily court explained further that [i]ntent to influence is a threshold issue. In its absence there is no liability even though a plaintiff has relied on the misrepresentation to his or her detriment, and even if such reliance were reasonably foreseeable. Id. at 412 (emphasis and internal citations omitted). 17 Schneider argues that the issue of a party's intent is necessarily a factual inquiry, making summary judgment inappropriate. Schneider relies on this court's decision in Calnetics v. Volkswagen of America, 532 F.2d 674 (9th Cir.1976), to support this proposition. However, the Bily decision instructs that if competent evidence does not permit a reasonable inference that the auditor supplied its report with knowledge of the existence of a specific transaction or a well-defined type of transaction which the report was intended to influence, the auditor is not placed on notice of the risks of the audit engagement. In such cases, summary adjudication will be appropriate because plaintiff will not as a matter of law fall within the class of intended beneficiaries. Bily, 3 Cal.4th at 414-15 (emphasis added). 18 It is undisputed that AA & Co. had knowledge of the contemplated stock sale. It is also uncontroverted, however, that AA & Co.'s audit was intended to satisfy Merit's obligations to its lender, and that AA & Co.'s primary purpose for referencing the transaction in the audit report was to alert the lender to the possible violation of a term of the loan agreement. Thus, we hold that the district court's grant of summary judgment in favor of AA & Co. on Schneider's claim for negligent misrepresentation was correct under Bily because the uncontroverted evidence suggests that AA & Co. did not intend to influence the stock sale with its audit report. 19 D. Denial of Schneider's Oral Request for a Continuance Made At the Hearing on AA & Co.'s Motion. 20 A district court's decision not to permit additional discovery pursuant to Federal Rule of Civil Procedure 56(f) is reviewed for an abuse of discretion. Int'l Alliance of Theatrical and Stage Employees and Moving Picture Machine Operators v. Compact Video Svcs., Inc., 50 F.3d 1464, 1466 (9th Cir.1995). We will only find that the district court abused its discretion if the movant diligently pursued its previous discovery opportunities, and if the movant can show how allowing additional discovery would have precluded summary judgment. Qualls v. Blue Cross of California, 22 F.3d 839, 844 (9th Cir.1994) (emphasis in original). 21 Schneider argues that he made an earlier written request for a continuance in his response to Gillespie's and Terry's separate motions for summary judgment in which he alluded to his need for discovery to uncover the extent of AA & Co.'s knowledge and intent. However, references in memoranda and declarations to a need for discovery do not qualify as motions under Rule 56(f). See Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439, 1443 (9th Cir.1986). 22 We noted in Brae that Rule 56(f) requires affidavits setting forth the particular facts expected from the movant's discovery. Failure to comply with the requirements of Rule 56(f) is a proper ground for denying discovery and proceeding to summary judgment. See 790 F.2d at 1443. 23 Consistent with our conclusion in Brae, Schneider never moved for discovery in the manner required by Rule 56(f). See id. (Having taken no discovery, Brae can hardly argue at this late date that the district court abused its discretion in ruling on the summary judgment in light of the fact that Brae itself failed to pursue the procedural remedy which the Federal Rules so clearly provided.) (internal quotations and citations omitted). 24 Therefore, the district court did not abuse its discretion by refusing Schneider's last-minute, oral request for discovery in light of his noncompliance with Rule 56(f), and his failure to pursue discovery diligently over the course of the five weeks between the filing of AA & Co.'s motion and the hearing date.