Court Opinion

ID: 178313
Source: CourtListenerOpinion
Date Created: 2010-10-29 00:03:47+00
Date Added: 2024-06-11T17:25:44.199120
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             OCT 28 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

RYAN INVESTMENT CORPORATION,                     No. 09-15409

              Plaintiff-counter-defendant -      D.C. No. 5:06-cv-03219-JW
Appellee,

  v.                                             MEMORANDUM *

PEDREGAL DE CABO SAN LUCAS and
CAPELLA PEDREGAL - CABO SAN
LUCAS, FKA Farallon Spa & Resort,

              Defendants,

BRENT R. WALDMAN,

              Counter-defendant,

  and

JUAN DIAZ RIVERA; et al.,

              Defendants - Appellants,

DESARROLLADORA FARALLON and
SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE,
FKA Desarrolladora Farallon S. De R. L.,

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                Defendants-counter-claimants
- Appellants.

RYAN INVESTMENT CORPORATION,                    No. 09-15702

                Plaintiff-counter-defendant -   D.C. No. 5:06-cv-03219-JW
Appellant,

 v.

PEDREGAL DE CABO SAN LUCAS and
CAPELLA PEDREGAL - CABO SAN
LUCAS, FKA Farallon Spa & Resort,

                Defendants,

BRENT R. WALDMAN,

                Counter-defendant,

 and

JUAN DIAZ RIVERA; et al.,

                Defendants - Appellees,

DESARROLLADORA FARALLON and
SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE,
FKA Desarrolladora Farallon S. De R. L.,

                Defendants-counter-claimants
- Appellees.

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                    Appeal from the United States District Court
                      for the Northern District of California
                      James Ware, District Judge, Presiding

                       Argued and Submitted October 7, 2010
                             San Francisco, California

Before: THOMPSON, SILVERMAN and McKEOWN, Circuit Judges.

      The defendant landowners and related entities appeal the district court’s

judgment in favor of the plaintiff, Ryan Investment Corporation (“Ryan”), in this

diversity suit for breach of an alleged contract relating to the defendants’ resort

development project. The district court awarded Ryan $1.5 million based upon the

court’s interpretation of a letter dated August 28, 2002 (the “Letter”). On appeal,

the parties dispute whether the Letter is a binding contract or an unenforceable

agreement to agree. Ryan contends that if the Letter is not a contract, this court

should affirm the district court’s award on the alternative theory of quantum

meruit.

      We review de novo those portions of the district court’s decision that are

based upon an analysis of the alleged contractual language and application of the

principles of contract interpretation. Miller v. Safeco Title Ins. Co., 758 F.2d 364,

367 (9th Cir. 1985). We review factual findings that are based upon extrinsic

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evidence for clear error. Id. We have jurisdiction under 28 U.S.C. § 1332, and we

reverse and remand to the district court for further proceedings.

      Even assuming the Letter is binding on the parties, the district court erred in

awarding Ryan contract damages, because Ryan did not perform under the terms of

the Letter. The Letter provides that Ryan was to secure financing for the project by

obtaining a loan and third party equity investors, and was to locate a hotel operator

for the planned resort. Because Ryan did not succeed in obtaining either equity

financing or a loan, it did not fulfill the clause in the Letter pursuant to which the

district court awarded damages. Ryan is also not entitled to any compensation

under the provisions of the Letter that promise Ryan a percentage interest in a

venture between the parties, because that venture was never formed. Ryan was

therefore not entitled to recover contract damages irrespective of the Letter’s

enforceability, and we reverse the district court’s award in the amount of $1.5

million.1

      Ryan urges this court to affirm the district court’s award on a theory of

quantum meruit. Although it did not obtain financial support for the project, Ryan

      1
        Because we reverse, we need not decide whether the district court properly
omitted cross-appellees Juan Diaz Rivera, an individual, and Desarrolladora
Farallon, an entity, as judgment debtors.

                                            4
contends it conferred a benefit on the defendants by facilitating the signing of a

hotel operator agreement. The district court did not address this issue.

      Ryan may be entitled to recover some amount in quantum meruit for having

successfully facilitated the signing of the hotel operator agreement. See Day v.

Alta Bates Med. Ctr., 119 Cal. Rptr. 2d 606, 609 (Cal. Ct. App. 2002). However,

we decline to affirm the $1.5 million judgment on that theory. In California, “[t]he

measure of recovery in quantum meruit is the reasonable value of the services

rendered, provided they were of direct benefit to the defendant.” Palmer v. Gregg,

422 P.2d 985, 986 (Cal. 1967). The district court did not attempt to value the

services Ryan contends it rendered by facilitating the signing of the hotel operator

agreement. On the record before us, we also have difficulty determining whether

Ryan properly raised the quantum meruit issue before the district court. Because

the district court did not make findings to support a $1.5 million award in quantum

meruit, we do not affirm the judgment on this alternative theory of recovery.

       Instead, we remand to the district court for determination of: (a) whether

Ryan properly raised the issue of quantum meruit before the district court; (b) if so,

whether Ryan is entitled to recover under a theory of quantum meruit; and (c) if

Ryan is entitled to recover in quantum meruit, the proper amount of the award.

      REVERSED and REMANDED.

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