Court Opinion

ID: 3159940
Source: CourtListenerOpinion
Date Created: 2015-12-03 21:01:03.79553+00
Date Added: 2024-06-11T11:57:46.877980
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              DEC 03 2015

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

LAWRENCE SAKS, M.D., c/o Marvin                  No. 13-56148
Gardens, DBA Reconstructive Surgery
Affiliates, DBA Reconstructive Surgery           D.C. No. 2:09-cv-02885-JAK-E
Associates; MADISON PARK SURGERY
AND LASER CENTER, DBA Madison
Park Surgery Affiliates,                         MEMORANDUM*

              Plaintiffs - Appellants,

 v.

INTERNATIONAL LONGSHORE &
WAREHOUSE UNION-PACIFIC
MARITIME ASSOCIATION BENEFIT
PLANS; ILWU-PMA WELFARE PLAN
TRUSTEES; ILWU-PMA WELFARE
PLAN,

              Defendants - Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                    John A. Kronstadt, District Judge, Presiding

                     Argued and Submitted November 3, 2015
                              Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: W. FLETCHER and GOULD, Circuit Judges and CHRISTENSEN,** Chief
District Judge.

       Lawrence Saks, a former plastic surgeon, appeals the district court’s grant of

summary judgment in favor of International Longshore & Warehouse Union-

Pacific Maritime Association Benefit Plans (ILWU-PMA) on Saks’s quantum

meruit claims for over $5 million in unpaid medical treatments. Saks’s former

business, Madison Park Surgery and Laser Center (Madison Park) is also named as

a plaintiff in this action, and appeals the district court’s denial of its motion to set

aside default. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

       The district court’s grant of summary judgment is reviewed de novo. See,

e.g., Szajer v. City of Los Angeles, 632 F.3d 607, 610 (9th Cir. 2011) (citation

omitted). Saks challenges the district court’s finding that his claims are barred by

the unclean hands doctrine, and raises three distinct arguments for the first time on

appeal: (1) that his failure to comply with the notice requirements of a Preferred

Provider Agreement (PPA) was not willful; (2) that this failure was unrelated to his

quantum meruit claim as required by California’s unclean hands doctrine; and (3)

that ILWU-PMA was not prejudiced by the failure. We generally “[do] not

consider an issue not passed upon below.” Dodd v. Hood River Cty., 59 F.3d 852,

       **
             The Honorable Dana L. Christensen, Chief District Judge for the U.S.
District Court for the District of Montana, sitting by designation.

                                             2
863 (9th Cir. 1995) (citation and quotation marks omitted). An issue is generally

deemed waived if it is not “raised sufficiently for the trial court to rule on it.”

Whittaker Corp.v. Execuair Corp., 953 F.2d 510, 515 (9th Cir. 1992) (citation and

quotation marks omitted). While Saks points to several brief, vague comments in

the record related to his belief that he was fulfilling his contractual obligations

under the PPA, these statements were not sufficient to raise the issue of

willfulness. Saks also does not explain why the other two arguments raised for the

first time on appeal are not waived. We conclude that Saks has waived these

arguments. We do not normally sit to resolve issues that were not presented to the

district court. See Dodd, 59 F.3d at 863; Whittaker Corp, 953 F.2d at 515.

      Even if Saks had not waived these arguments, his quantum meruit claim is

barred by the doctrine of unclean hands. We apply California law. In determining

whether a particular misconduct constitutes unclean hands, California courts

consider (1) analogous case law, (2) the nature of the misconduct, and (3) the

relationship of the misconduct to the claimed injuries. Kendall-Jackson Winery,

Ltd. v. Superior Court, 90 Cal. Rptr. 2d 743, 749 (Cal. Ct. App. 1999).

Additionally, “the misconduct must prejudicially affect the rights of the person

against whom the relief is sought so that it would be inequitable to grant such

relief.” Id. (citation and quotation marks omitted). While the district court

                                            3
considered prejudice, the nature of the misconduct, and the relationship of the

misconduct to the claimed injuries, it did not address analogous case law.

However, we may affirm a grant of summary judgment on any basis supported in

the record. Video Software Dealers Ass’n v. Schwarzenegger, 556 F.3d 950, 956

(9th Cir. 2009) (citation and quotation marks omitted).

      Under the first prong of analogous case law, there does not need to be a case

precisely on point. See Unilogic, Inc., v. Burroughs Corp., 12 Cal. Rptr. 2d 741,

744 (Cal. Ct. App. 1992). California has long permitted an unclean hands defense

to be sustained on the basis of breach of contract. See, e.g., Sketchley v. Lipkin,

222 P.2d 927, 934 (Cal. Ct. App. 1950) (“Equity does not aid him who has

breached his agreement.”) Regarding the second prong, Saks’s

misconduct—specifically, his failure to report his criminal convictions,

suspensions of his medical license, and loss of staffing privileges while continuing

to collect payments for treatments provided to ILWU-PMA members—constitutes

unclean hands. The third and final prong is also met, because Saks’s failure to

report under the terms of the PPA is directly related to his claim for payments from

ILWU-PMA. Also, the record is clear that ILWU-PMA was prejudiced by

continuing to make nearly a million dollars in payments to Saks and Madison Park

                                           4
because it was unaware of the termination of the PPA. The doctrine of unclean

hands applies and Saks is barred from any recovery of his quantum meruit claim.1

      We review a district court’s denial of a motion to set aside default for abuse

of discretion. See Brandt v. Am. Bankers Ins. Co. of Fla., 653 F.3d 1108, 1110

(9th Cir. 2011) (citations omitted). In assessing whether the district court abused

its discretion in denying a motion to set aside default, we review de novo whether it

identified the correct legal rule. Id. We next determine whether the application of

the correct legal standard was (1) illogical, (2) implausible, or (3) without support

in inferences that may be drawn from the facts in the record. Id.

      The district court correctly identified Fed. R. Civ. P. 55(c) as the rule to

apply when setting aside entry of default.2 Under this rule, a court may set aside an

entry of default for “good cause.” The district court rightly stated that the burden

of establishing good cause falls on the moving party. See Franchise Holding II,

LLC v. Huntington Restaurants Group, Inc., 375 F.3d 922, 926 (9th Cir. 2004).

      1
       We also note that there is no evidence in the record that ILWU-PMA has
any outstanding bills, let alone $5 million worth.
      2
        The district also analyzed the motion to set aside default under Fed. R. Civ.
P. 60(b). This part of the district court’s reasoning was in error, because Rule
60(b) only applies to relief from a final judgment, order, or proceeding. At the
time of ruling there had been no final judgment against Madison Park, only an
entry of default.

                                           5
The district court also correctly enumerated the factors that must be considered to

evaluate whether “good cause” exists: (1) whether the party seeking to set aside

default engaged in culpable conduct that led to the default; (2) whether the party

seeking to set aside default had a meritorious defense; and (3) whether setting aside

default would prejudice the non-moving party. Id. at 925–26.

      The court considered all three factors and concluded that (1) that Madison

Park was culpable for its own default, (2) that Madison Park lacked a meritorious

defense, and (3) that setting aside the default would prejudice ILWU-PMA. The

district court’s analysis on all three “good cause” factors was logical, plausible, and

supported by evidence in the record. There was no abuse of discretion in denying

the motion to set aside default.

      AFFIRMED.

                                           6