Court Opinion

ID: 151248
Source: CourtListenerOpinion
Date Created: 2010-07-22 00:05:28+00
Date Added: 2024-06-11T15:00:21.333185
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                           FILED
                           FOR THE NINTH CIRCUIT                              JUL 21 2010

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

TALISMAN CAPITAL TALON FUND,                    No. 09-16256
LTD.,
                                                D.C. No. 3:05-cv-00354-BES-
             Plaintiff - Appellant,             VPC

       v.
                                                MEMORANDUM*
RUDOLF W. GUNNERMAN;
SUPLHCO, INC.,

             Defendants - Appellees.

                   Appeal from the United States District Court
                            for the District of Nevada
                   Brian E. Sandoval, District Judge, Presiding

                       Argued and Submitted June 16, 2010
                            San Francisco, California

Before: RIPPLE,** RYMER and FISHER, Circuit Judges.

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

        **
         The Honorable Kenneth F. Ripple, Senior United States Circuit Judge for
the Seventh Circuit, sitting by designation.
      Talisman Capital Talon Fund appeals the district court’s decision in

Gunnerman and SulphCo’s favor on breach of contract and tort claims after a

bench trial. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

      First, Talisman on appeal does not dispute that the meaning of the Field is

ambiguous and that extrinsic evidence is relevant to interpret its meaning, but

argues that the district court committed legal error by relying on certain extrinsic

evidence that is irrelevant or inadmissible under controlling Delaware contract

principles. We disagree. The district court properly relied on extrinsic evidence of

the parties’ objective manifestations of intent to interpret an ambiguous contract

term. See Eagle Indus. Inc. v. DeVilbiss Health Care Inc., 702 A.2d 1228, 1233

(Del. 1997) (“In construing an ambiguous contractual provision, a court may

consider evidence of prior agreements and communications of the parties as well as

trade usage or course of dealing.”); United Rentals, Inc. v. RAM Holdings, Inc.,

937 A.2d 810, 835 (Del. Ch. 2007) (“[E]xtrinsic evidence may include overt

statements and acts of the parties, the business context, prior dealings between the

parties, and business custom and usage in the industry.”) (internal alteration and

quotation marks omitted).

      Second, the district court’s factual findings in support of its interpretation of

the contract were not clearly erroneous. See In re U.S. Fin. Sec. Litig., 729 F.2d

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628, 632 (9th Cir. 1984) (“When the inquiry extends beyond the words of the

contract and focuses on related facts [] the trial court’s consideration of extrinsic

evidence is entitled to great deference and its interpretation of the contract will not

be reversed unless it is clearly erroneous.”). Talisman contends that the definition

of the Field in the Transfer Agreement included the disputed SulphCo technology.

Among other things, Talisman heavily relies on the express exclusion of the

disputed technology from Field in the Termination and Release Agreement,

arguing that this exclusion would have been unnecessary had the parties

understood the Field not to include the disputed technology in any event. It also

relies on its expert’s opinion that the disputed technology clearly comes within the

parameters of the Field, and urges that Gunnerman’s and Clean Fuels’ conduct in

treating it as outside the Field must be disregarded because Gunnerman concealed

a letter acknowledging the “natural fit” between the technologies.

      The district court, after considering all this evidence, rejected Talisman’s

reading of the Field’s application to the disputed technology, finding that “the

weight of the evidence indicates that Gunnerman and Capital Strategies

[Talisman’s predecessor in interest] did not intend or believe that the Transfer

Agreement . . . conveyed the [disputed] technology to Capital Strategies.” This

finding is supported by the record. Capital Strategies was fully aware in 2003 of

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Clean Fuel’s acquiescence in Gunnerman’s position that the disputed technology

was not covered by the Field. It also had independent access to information

describing the disputed technology, including published patents assigned to

SulphCo that Talisman now claims to own, notwithstanding any representations or

nondisclosure about that technology by Gunnerman. These patents were not

included in the Transfer Agreement’s nonexclusive list of patents and applications

subject to the transfer. Moreover, whether or not Clean Fuels’ acquiescence in

Gunnerman’s claim that the SulphCo technology was outside the Field was

misinformed, Capital Strategies had every reason to understand Gunnerman’s

interpretation of the Field during the 2003 negotiations. If, contrary to that

interpretation, the disputed technology is clearly within the Field (as Talisman’s

expert now opines), Capital Strategies could have challenged Gunnerman’s

interpretation and resolved the dispute by explicit terms in the Transfer Agreement.

Its failure to do so further supports the district court’s finding that Capital

Strategies did not intend or believe that the Transfer Agreement affected the

disputed technology. Although Talisman’s current interpretation of the scope of

the Field is not wholly implausible, the district court’s findings supporting a

contrary interpretation are not clearly erroneous.

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      Third, these same reasons defeat Talisman’s argument that the district court

abused its discretion because its contract interpretation is inconsistent with the

testimony of Talisman’s expert witness based on the language of the Transfer

Agreement. The district court resolved the ambiguity as to the scope of the Field

by looking to what Gunnerman and Capital Strategies intended the Transfer

Agreement to mean, as evidenced by their objective manifestations of intent and

the context in which it was negotiated. The court’s resolution was “support[ed]

[by] inferences that may be drawn from the record,” notwithstanding Talisman’s

expert’s contrary testimony. United States v. Hinkson, 585 F.3d 1247, 1262 (9th

Cir. 2009) (en banc) (explaining the abuse of discretion standard of review).

      Finally, having affirmed the district court’s interpretation of the Transfer

Agreement, we also affirm its rejection of Talisman’s conversion claim. Talisman

does not own the relevant property under the Transfer Agreement and cannot

prevail on a claim that another has converted it. See Evans v. Dean Witter

Reynolds, Inc., 5 P.3d 1043, 1048 (Nev. 2000); Khorshid, Inc. v. Christian, 257

S.W.3d 748, 758-59 (Tex. App. 2008).

      AFFIRMED.

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