Court Opinion

ID: 5136585
Source: CourtListenerOpinion
Date Created: 2021-12-20 21:02:24.777631+00
Date Added: 2024-06-11T08:23:56.799191
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       DEC 20 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

KEVIN H. RINDLISBACHER, husband; et             Nos. 20-17331
al.,                                                 21-16085

                Plaintiffs-Appellants,          D.C. No. 2:18-cv-01131-MTL

 v.
                                                MEMORANDUM*
STEINWAY, INC., DBA Steinway & Sons,
a Delaware corporation,

                Defendant-Appellee.

                   Appeal from the United States District Court
                            for the District of Arizona
                   Michael T. Liburdi, District Judge, Presiding

                     Argued and Submitted December 8, 2021
                            San Francisco, California

Before: WARDLAW, BRESS, and BUMATAY, Circuit Judges.

      Kevin and Jami Rindlisbacher and Piano Showroom of Arizona, Inc.

(collectively, “Rindlisbacher”) appeal the district court’s grant of summary

judgment to Steinway, Inc. (“Steinway”) on Rindlisbacher’s claim for constructive

fraud. Rindlisbacher also appeals the district court’s award of attorneys’ fees to

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Steinway. We have jurisdiction under 28 U.S.C. § 1291. Reviewing the grant of

summary judgment de novo, see KST Data, Inc. v. DXC Tech. Co., 980 F.3d 709,

713 (9th Cir. 2020), and the attorneys’ fees award for an abuse of discretion, Johnson

v. MGM Holdings, Inc., 943 F.3d 1239, 1241 (9th Cir. 2019), we affirm.

      1.     The district court correctly concluded that Rindlisbacher’s fraud claim

is untimely under Arizona’s applicable three-year statute of limitations. See A.R.S.

§ 12-543. The statute of limitations begins to run when the plaintiff discovers facts

constituting fraud, or when he “by reasonable diligence could have learned of the

fraud, whether or not he actually learned of it.” Coronado Dev. Corp. v. Superior

Ct., 678 P.2d 535, 537 (Ariz. Ct. App. 1984); see also Walk v. Ring, 44 P.3d 990,

996 (Ariz. 2002) (“[T]he core question is whether a reasonable person would have

been on notice to investigate.”).

      Here, by April 12, 2015, three years before filing suit, Rindlisbacher was on

notice to investigate the Phoenix piano market and thus Steinway’s representations

that the market had a sales potential of forty-five Steinway pianos per year. On

January 30, 2014, Rindlisbacher sent an email to Steinway predicting only twenty-

six piano sales that year and noting that “this market hasn’t sold this number of

Steinway & Son’s units in a very long time—at least 8 years.”               In 2011,

Rindlisbacher was also quoted in two newspaper articles acknowledging the difficult

economic climate for piano sales. In addition, his actual sales from 2011 onward

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fell far below forty-five pianos a year. Given this, and given Rindlisbacher’s nearly

four decades of experience in the piano market, his assertion that he lacked both

actual knowledge that Steinway’s sales goal was unreachable, and notice to

investigate the matter, finds no support in the record.          Thus, Rindlisbacher’s

constructive fraud claim is time-barred.

      2.     Regardless, Rindlisbacher’s claim would still fail because he did not

have a “fiduciary or confidential relationship” with Steinway, as is required for a

constructive fraud claim under Arizona law. Green v. Lisa Frank, Inc., 211 P.3d 16,

34 (Ariz. Ct. App. 2009). The contract between the parties provided that “[t]his

Agreement does not create an employer-employee relationship, an agency or joint

venture between Steinway and Dealer. . . . Dealer shall be an independent contractor

only.” When the parties have “expressly characterized their legal relationship, such

characterization will be persuasive” in determining their mutual obligations. Urias

v. PCS Health Sys., Inc., 118 P.3d 29, 35 (Ariz. Ct. App. 2005).

      To overcome this contractual provision, Rindlisbacher points to what he

claims is Steinway’s greater bargaining power and its superior access to internal

sales data. But this is insufficient to establish a confidential relationship for purposes

of constructive fraud. See, e.g., Klinger v. Hummel, 464 P.2d 676, 679 (Ariz. Ct.

App. 1970) (finding no confidential relationship in an arms-length real estate

transaction even though “Mr. Hummel was experienced in real estate transactions

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while the Klingers were not”). Steinway’s promotional materials emphasizing the

“Steinway family” and its “partnership” with dealers do not create a confidential or

fiduciary relationship either. See Rhoads v. Harvey Publications, Inc., 700 P.2d 840,

844 (Ariz. Ct. App. 1984) (“Rhoads was told he was a ‘staff member’ and a ‘trusted

and valued member of the Harvey family.’ Those words are not actionable.”). Thus,

Rindlisbacher has not created a genuine dispute of material fact on his constructive

fraud claim, even if it were timely.1

      3.     The district court did not abuse its discretion in awarding $829,330 in

attorneys’ fees to Steinway as the prevailing party. Attorneys’ fees were available

under Arizona’s fee-shifting statute, which provides that “[i]n any contested action

arising out of a contract, express or implied, the court may award the successful party

reasonable attorney fees.” A.R.S. § 12-341.01(A). “The meaning of ‘arises out of

contract’ is broad for the purposes of this statute.” ML Servicing Co. v. Coles, 334

P.3d 745, 753 (Ariz. Ct. App. 2014). “The test to determine if an action arises out

of contract is whether the plaintiff would have a claim even in the absence of a

contract.” Id. (citation and quotation omitted); see, e.g., Marcus v. Fox, 723 P.2d

1
 In light of this conclusion, we need not address whether Rindlisbacher advanced a
cognizable theory of damages. In addition, while Rindlisbacher challenges the
district court’s determination that it would not consider new factual allegations that
Rindlisbacher first raised at the summary judgment stage, the district court explained
why those facts would not change the outcome even if they were considered, and
Rindlisbacher provides no reason to question that conclusion.

                                          4
682, 684–85 (Ariz. 1986) (holding that attorneys’ fees were available for the tort of

fraudulent inducement). Here, Rindlisbacher’s claim arises out of a contract within

the meaning of A.R.S. § 12-341.01(A) because the fraud claim would not exist but

for the contractual relationship with Steinway. See id. To that point, Rindlisbacher

in his briefing repeatedly describes his claim as “arising out of the Agreement.”2

      The district court correctly rejected Rindlisbacher’s argument that New York

law should apply to the attorneys’ fees question, based on the choice-of-law

provision in the parties’ agreement specifying that “[t]his Agreement shall be

governed by and construed in accordance with the laws of the State of New York,

without regard to its conflict of laws principles.” We apply Arizona law to determine

the scope of this provision. See, e.g., Winsor v. Glasswerks PHX, L.L.C., 63 P.3d

1040, 1044 (Ariz. Ct. App. 2003). And Arizona courts have determined that

“[c]laims arising in tort are not ordinarily controlled by a contractual choice of law

provision,” unless “resolution of the claims relates to interpretation of the

contract . . . [and] the tort claims could not be adjudicated without analyzing whether

the parties were in compliance with the contract.” Id. at 1043–44 (citation and

quotation omitted); see also Sutter Home Winery, Inc. v. Vintage Selections, Ltd.,

971 F.2d 401, 407 (9th Cir. 1992) (applying Arizona law to tort claims for unfair

2
  Rindlisbacher’s argument that A.R.S. § 12-341.01 only applies to contracts
governed by Arizona law lacks merit. Nothing in the statute imposes that limitation.

                                          5
competition, despite a California choice-of-law provision); Consol. Data Terminals

v. Applied Digital Data Sys., 708 F.2d 385, 390 n.3 (9th Cir. 1983) (“[T]ort law and

the law of punitive damages are not controlled by the contract choice of law

provision.”) (punctuation omitted).

      Here, Rindlisbacher’s fraud claim does not “relate[] to [the] interpretation” of

the parties’ contract in any relevant sense. Winsor, 63 P.3d at 1044. Unlike the

broad “arising out of” language in A.R.S. § 12-341.01(A), the parties’ narrowly

drawn New York choice-of-law provision does not extend to Rindlisbacher’s instant

tort suit. The district court therefore did not err in applying Arizona law to the issue

of attorneys’ fees, and Rindlisbacher raises no other challenges to the fee award.

      AFFIRMED.

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