Court Opinion

ID: 9459506
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:22:44.245815+00
Date Added: 2024-06-11T17:36:11.800411
License: Public Domain

ELY, Circuit Judge
(dissenting):
I respectfully dissent. In doing so, I first emphasize the requirement that all reasonable intendments touching upon the existence of a genuine issue of material fact must be indulged against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Griffeth v. Utah Power & Light Co., 226 F.2d 661 (9th Cir. 1955). This traditional and necessarily rigid requirement stems from recognition that summary judgment is an extremely drastic remedy. 3 Barron & Holtzoff, Federal Practice and Procedure § 1231 (Wright ed.), quoted in Hoffman v. Babbitt Bros. Trading Co., 203 F.2d 636, 637 n. 1 (9th Cir. 1953). Accordingly, summary judgment should be rendered only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R. Civ.P. 56(c). See Consolidated Electric Co. v. United States, 355 F.2d 437 (9th Cir. 1966).
From the voluminous discovery records and briefs in this case, and from the unambiguous provisions of the first-refusal clause of the contract, I simply cannot agree that the negotiations entered into between Whittell and O’Neill failed to raise a genuine issue of fact concerning Zephyr Cove’s right to purchase the property that it had leased and improved.
Paragraph 4 of the lease agreement expressly provides that “[i]n the event the Lessor does have a bona fide offer of sale, the Lessees 1 will be given the first opportunity to purchase at the same terms and conditions of said offer.” The majority, however, refuses to read this provision independently of the first sentence of paragraph 4, which provides for cancellation of the lease on six months notice of a bona fide sale of Zephyr Cove Beach. Thus the majority concludes that appellant’s right of first refusal was conditioned upon the lessor’s decision to sell the property accompanied by an actual termination of the lease.
To justify this conclusion in a summary judgment context, the movant (appellee) had the initial and heavy burden of demonstrating the absence of any genuine issue of material fact so that, under applicable principles of substantive law, it was entitled to judgment as a matter of law.2 The several cases examined by the majority do not, however, satisfy me that appellee was entitled to judgment as matter of law. To the contrary, as the majority notes, the “authorities disclose that there are two general classes *1128of first refusal clauses to be found in leases.” Similarly, in the cited cases the factual issues, including those involving the intent of the parties, were fully tried, producing varying conclusions concerning the right of first refusal.
Further, as the majority also expressly recognizes, “[t]he crux of the case is whether the sentence calling for the right of first refusal is to be interpreted as an independent, free-floating provision unaffected by the first sentence of paragraph 4. . . .” As I perceive this critical factual issue, the relationship between these two key sentences cannot be divined solely from within the four corners of the contract. To go beyond the borders of the contract, however, would necessitate inquiry into the intentions of the parties; and, as the majority admits, there was nothing presented that fully elucidated those intentions.3 Absent a plenary trial, such was impossible. Moreover, the movant (appellee) conceded that “construction of the [first refusal] provision would be in some doubt” even if the lease were not terminated prior to a proposed sale. In consequence, I can find no basis for the majority’s implied conclusion that the movant met its prima facie burden of dispelling the existence of triable issues.
Even if we were to assume arguendo that appellee, as the movant, has met his prima facie burden of dispelling the existence of a triable issue, I believe that in considering all the evidence in a light most favorable to appellant it is indisputable that Zephyr Cove has presented a genuine issue of material fact as the traditional test of which has hitherto been understood. See, e. g., Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Northrop Architectural Systems v. Lup-ton Mfg. Co., 437 F.2d 889, 891 (9th Cir. 1970).
The deposition of Lewis, Jr. (counsel for Whittell), reveals, for example, that Lewis, Jr., told Whittell that Whittell could not sell the beach property directly to O’Neill because the first refusal clause was supposed to operate in Zephyr Cove’s favor. The majority ascribes some importance to a letter from Lewis, Sr. (also counsel for Whittell) suggesting that Lewis, Sr. interpreted the subject clauses of the lease “to mean that if the lease terminated on six months notice, Empey [appellant’s predecessor] would have a right to buy. . . .” Appellant, however, adequately met this averment by pointing out that in writing this letter “Lewis, Sr. was representing Whittell’s interest in retaining the [O’Neill] deposit [on the Zephyr Cove Beach property] and, therefore, proposed an admittedly doubtful defense against possible enforcement of the right of first refusal.” Construing this conflicting evidence, as we must, in the light most favorable to the party opposing summary judgment, appellant’s interpretation should prevail.
In addition, Whittell testified upon deposition that since he and O’Neill felt (in 1963) that Empey had the right to buy the property and that Whittell was without a right to sell it without consulting Empey, they had left Zephyr Cove out of the description.
*1129Finally, Whittell’s failure to contradict the written assertion that appellant had “a prior right of purchase on the same terms and conditions involved in a contemplated sale to anyone else” leads to a reasonable inference, at least for purposes of determining summary judgment, that the assertion was admitted. See Megarry Brothers, Inc. v. United States, 404 F.2d 479 (8th Cir. 1968); Rumble v. United States, 143 F. 772 (9th Cir. 1906); C. McCormick, Law of Evidence 531-32 (1954) (“failure to reply to a letter, containing statements which it would be natural under all the circumstances for the addressee to deny if he believed them untrue, is receivable as evidence of an admission by silence”).
The majority appears to believe, erroneously, that the appellant carried the burden, not only in resisting the motion for summary judgment, but also in demonstrating the merits of its claim in this court. This is not right. While it recognizes that there had been received no evidence adequate to allow for the determination of the intent of the parties in respect to paragraph 4, the majority nevertheless underscores the absence of evidence sufficient “to support appellant’s theory.” Similarly, the majority concludes that “Whittell is not to be faulted for doing what was required to avoid the necessity of offering the Zephyr Cove property for sale to the lessee.” Whittell, however, must be faulted if, as appellant maintains, he breached the lease agreement. Appellant’s only burden in this respect was to raise a triable issue, and that burden arose only if ap-pellee, as the movant, first made the pri-ma facie showing that “it is quite clear what the truth is.” See note 1 supra.
I am thus bewildered by the majority’s willingness to affirm summary judgment despite the movant’s failure to meet his prima facie burden. I am equally confounded by my colleagues’ readiness to make factual determinations essential to the interpretation of the contract, especially in the presence of conflicting averments and in the acknowledged absence of adequate information as to intent. By allowing the movant to meet his burden by merely offering the motion, and by requiring the appellant, at the same time, to set forth far more than “specific facts showing that there is a genuine issue for trial,” the majority’s decision compels the party responding to the motion to shoulder the additional burden of convincing the court that he should prevail on the merits. I respectfully submit that this turns the summary judgment procedure on its head; consequently, I would reverse.

. The lease in question was originally taken by two individuals. The appellant corporation was subsequently created and the lease cosigned to it.

. Sartor v. Arkansas Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 728, 88 L.Ed. 1593 (1944) (movant has the burden of showing that “it is quite clear what the truth is” thereby excluding any real doubt as to the existence of a genuine issue of material fact) ; 6 J. Moore, Federal Practice U 56.15 [3], at 2335 (2d ed. 1973) (“The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts”).

. The majority -writes: “The record does not disclose nor do the parties in their briefs point to any negotiations or communications between the parties to the lease involved, or as to a prior lease, which would indicate, or from which a trier of the facts might determine, what the parties intended by the provisions of paragraph 4.” I disagree, believing that the record carries us further. The material presented by the appellee, with some inferences that might be reasonably drawn from it, would have adequately supported a factual determination that the parties to the contract did in fact intend that the second sentence of paragraph 4 be literally applied. After all, the appellee intended to, and did, make substantial improvements on the leased property. It is altogether possible, if not probable, that it intended to protect itself against any divestiture of its property which might result from Whittell’s exercising the unrestricted power to convey the whole property to a third person.