Court Opinion

ID: 3166540
Source: CourtListenerOpinion
Date Created: 2015-12-30 21:00:52.853597+00
Date Added: 2024-06-11T12:47:10.424479
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             DEC 30 2015

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

                            FOR THE NINTH CIRCUIT

JOYCE M. RANKINE; LAWRENCE S.                    No. 13-56917
STANTON,
                                                 D.C. No. 3:12-cv-02065-MMA-
               Plaintiffs-counter-defendants     BLM
- Appellees,

 v.                                              MEMORANDUM*

DOES, 1-10, inclusive,

               Defendant,

  And

ROLLER BEARING COMPANY OF
AMERICA, INC.,

               Defendant-counter-claimant -
Appellant.

                    Appeal from the United States District Court
                       for the Southern District of California
                    Michael M. Anello, District Judge, Presiding

                     Argued and Submitted December 11, 2015
                               Pasadena, California

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

      As part of its purchase of All Power, Inc. through a Stock Purchase

Agreement, Appellant Roller Bearing Company of America, Inc. (“RBC”)

executed promissory notes in favor of Baxter Rankine and Lawrence Stanton.

When the notes came due, RBC refused to pay, claiming that it was entitled to

set-off rights under a provision in the notes. Rankine and Stanton sued to recover

the amount owed. RBC counterclaimed, alleging that Rankine and Stanton had

breached the Stock Purchase Agreement by (1) failing to convey intellectual

property assets that had allegedly been misappropriated by some of All Power’s

“Key Employees,” and (2) failing to disclose that some of All Power’s federal

Parts Manufacturer Approvals (“PMAs”) were based on “technical assist letters”

that were provided by the Boeing Company and potentially subject to licensing

fees. The district court granted summary judgment to Rankine and Stanton on all

claims and awarded attorney’s fees and costs. We affirm.

      1. The district court correctly held that RBC had waived any claim to set-off

rights under the notes. While RBC did, contrary to the district court’s assertion,

introduce extrinsic evidence in support of its argument that it had waived only

       **
             The Honorable Jack Zouhary, District Judge for the U.S. District
Court for the Northern District of Ohio, sitting by designation.

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certain, limited claims, under California law such evidence is only relevant and

admissible to the extent that, in light of the proffered evidence, the contract

language is “reasonably susceptible” to the interpretation urged. See Wolf v. Walt

Disney Pictures & Television, 162 Cal. App. 4th 1107, 1126–27 (2008). Here,

under an amendment to the promissory notes, RBC agreed to waive set-off claims

“of any kind or nature.” RBC’s proffered evidence went to its General Counsel’s

subjective intent at the time of the amendment. RBC did not offer any extrinsic

evidence providing a basis for interpreting the actual language agreed upon as

reasonably susceptible to the limited construction RBC would give it. We

therefore conclude that the clear language of the amended notes must be applied as

written.

      2. The district court correctly granted summary judgment to Rankine and

Stanton on RBC’s counterclaim premised on a theory of “Key Employee”

misconduct. As the district court explained, RBC presented no evidence in support

of this claim. Its only basis was the deposition testimony of an RBC employee

who opined that former All Power employees would not have been able to start a

competing business, years after the sale, without proprietary information. This

unsupported speculation cannot raise an issue of triable fact sufficient to survive

summary judgment. See Fed. R. Civ. P. 56(a).

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      3. The district court declined to consider RBC’s PMA-based counterclaim

on the ground that it had been raised for the first time at summary judgment. We

need not decide whether the district court was correct to do so, because RBC failed

to raise a triable issue of material fact on this issue. RBC argues that Rankine and

Stanton breached the Stock Purchase Agreement by falsely representing that All

Power owned all necessary intellectual property assets, whereas in fact many of All

Power’s PMAs were secured through the use of “technical assist letters” owned by

Boeing. But the Stock Purchase Agreement’s definition of intellectual property

assets does not cover the Boeing technical assist letters about which RBC claims to

have been unaware. So, even if Rankine and Stanton had failed to disclose this

fact, it would not have constituted a breach of the agreement.

      4. The district court did not abuse its discretion in awarding attorney’s fees

and contractual costs pursuant to the promissory notes and the Stock Purchase

Agreement. See Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1011 (9th Cir.

2004). The district court’s decision was based on a reasonable construction of the

relevant provisions.

      AFFIRMED.

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