Court Opinion

ID: 4092170
Source: CourtListenerOpinion
Date Created: 2016-10-24 21:01:25.254634+00
Date Added: 2024-06-11T07:45:27.487429
License: Public Domain

NOT FOR PUBLICATION

                       UNITED STATES COURT OF APPEALS
                                                                           FILED
                                 FOR THE NINTH CIRCUIT
                                                                           OCT 24 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
In re: JOSEPH STANLEY VISSER;                    No.   14-35424
APRIL MCGOVERN VISSER,
                                                 D.C. No. 1:13-cv-00408-BLW
               Debtors,

------------------------------                   MEMORANDUM*

TWIN FALLS STAFFING, LLC; TOM
WELSTAD,

               Plaintiffs-Appellees,

 v.

JOSEPH STANLEY VISSER; APRIL
MCGOVERN VISSER,

               Defendants-Appellants.

In re: JOSEPH STANLEY VISSER;                    No.   14-35425
APRIL MCGOVERN VISSER,

               Debtors,                          D.C. No. 1:13-cv-00408-BLW

------------------------------

 TWIN FALLS STAFFING, LLC; TOM

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
WELSTAD,

              Plaintiffs-Appellants,

 v.

JOSEPH STANLEY VISSER; APRIL
MCGOVERN VISSER,

              Defendants-Appellees.

                    Appeal from the United States District Court
                              for the District of Idaho
                     B. Lynn Winmill, Chief Judge, Presiding

                       Argued and Submitted October 6, 2016
                               Seattle, Washington

Before: W. FLETCHER, FISHER, and N.R. SMITH, Circuit Judges.

      All parties, Twin Falls Staffing, LLC, and Tom Welstad (Plaintiffs), and

Joseph and April Visser (Defendants), appeal the district court’s memorandum

decision. We affirm.

      1. Twin Falls Staffing incurred $128,151.55 in attorney’s fees to obtain an

injunction against Joseph Visser in Idaho state court. Before a trial could be held

in state court, Joseph Visser filed for bankruptcy and forced Twin Falls Staffing to

pursue this action in federal bankruptcy court. At the bankruptcy court trial, Twin

Falls Staffing included the $128,151.55 in state court attorney’s fees in its request

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for damages. The bankruptcy court then awarded Twin Falls Staffing these

requested fees as damages.

       Idaho follows the “American Rule,” which permits courts to award

attorney’s fees when “they are authorized by statute or contract.” Hellar v.

Cenarrusa, 682 P.2d 524, 531 (Idaho 1984). Although on appeal Twin Falls

Staffing has now identified a statute under which it would be entitled to attorney’s

fees, separate and apart from an award of damages, see Idaho Code Ann. § 12-

120(3), it has not identified a contract or statute that would permit it to recover

attorney’s fees as damages. Therefore, the bankruptcy court erred in awarding—as

damages—the state court attorney’s fees Twin Falls Staffing incurred at a prior

stage in this litigation.

       2. Under 11 U.S.C. § 523(a)(6), “an individual debtor may not discharge a

debt ‘for willful and malicious injury by the debtor to another entity or to the

property of another entity.’” Barboza v. New Form, Inc. (In re Barboza), 545 F.3d
702, 706 (9th Cir. 2008) (quoting 11 U.S.C. § 523(a)(6)). The bankruptcy court

did not clearly err in finding that Joseph Visser willfully and maliciously injured

Twin Falls Staffing. Based on this finding, the bankruptcy court properly

concluded that the damages Twin Falls Staffing suffered as a direct result of

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Joseph Visser’s willful and malicious actions were non-dischargeable in

bankruptcy.

      The evidence presented at trial showed that when Joseph Visser began

working for Twin Falls Staffing in 2003, he signed an employment contract that

contained a non-competition clause. Stanley Visser, Joseph Visser’s father, was

responsible for administering Twin Falls Staffing’s employment contracts. In late

2008 or early 2009, Stanley Visser intentionally eliminated the non-competition

clause from Twin Falls Staffing’s standard employment contract. Joseph Visser

signed this new contract in 2009—and had several other Twin Falls Staffing

employees sign the contract—so that they could leave Twin Falls Staffing and

immediately join a competing business without incurring liability. While he was

still employed by Twin Falls Staffing, Joseph Visser took all the necessary steps to

set up Magic Valley Staffing, a competing business. In late October 2009, he left

suddenly and without notice, taking all of Twin Falls Staffing’s permanent

employees with him, and leaving no one to run the business. Magic Valley

Staffing took advantage of Twin Falls Staffing’s temporary inability to operate and

stole most of its major clients and temporary workers. The cumulative effect of

these actions severely damaged Twin Falls Staffing. In light of the evidence, we

cannot reverse the bankruptcy court’s factual finding. See Husain v. Olympic

                                          4
Airways, 316 F.3d 829, 835 (9th Cir. 2002) (“[I]f the district court’s findings are

plausible in light of the record viewed in its entirety, the appellate court cannot

reverse even if it is convinced it would have found differently.”).

      3. It is not clear from Ninth Circuit precedent whether we should give

deference to the bankruptcy court under an abuse of discretion standard or a clear

error standard in its award of damages. However, applying either standard, we

affirm the bankruptcy court’s award of $230,000 in lost net revenue.

      In Idaho, the proper “measure of damages for the breach of an anti-

competition clause is the amount that the plaintiff lost by reason of the breach.”

Trilogy Network Sys., Inc. v. Johnson, 172 P.3d 1119, 1121 (Idaho 2007).

However, the amount of lost profits is generally difficult to prove accurately, so the

law does not require the plaintiff to prove this type of damages with “mathematical

certainty.” Id. (quoting Vancil v. Anderson, 227 P.2d 74, 80 (Idaho 1951)).

Rather, plaintiff need only demonstrate the amount of lost profits with “‘reasonable

certainty[,]’ and this means ‘that [the] existence of damages must be taken out of

the realm of speculation.’” Id. (alterations in original) (quoting Anderson &

Nafziger v. G.T. Newcomb, Inc., 595 P.2d 709, 716–17 (Idaho 1979)).

      Twin Falls Staffing proved its lost profits at trial by presenting profit-and-

loss statements for the years just before and just after Visser left and started Magic

                                           5
Valley Staffing. Visser stipulated to the admission of these documents at trial

without any reservations or limitations. These documents demonstrated that Twin

Falls Staffing suffered a net loss of around $470,000 in the year following Visser’s

departure. However, the bankruptcy court only awarded Twin Falls Staffing

$230,000 in lost profits. Based on the evidence presented at trial, the bankruptcy

court concluded that not all of the losses Twin Falls Staffing suffered in the year

following Visser’s departure could be attributed to Visser’s breach of his contract.

The bankruptcy court neither abused its discretion nor clearly erred in determining

that Twin Falls Staffing demonstrated its lost profits with reasonable certainty.

      AFFIRMED.

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