Court Opinion

ID: 4019922
Source: CourtListenerOpinion
Date Created: 2016-07-28 20:00:59.832594+00
Date Added: 2024-06-11T14:33:55.563413
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            JUL 28 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

MONTANA TRUCKS, LLC,                             No.   14-35004

              Plaintiff-Appellant,               D.C. No. 9:12-cv-00023-DWM

 v.
                                                 MEMORANDUM*
UD TRUCKS NORTH AMERICA, INC.,
FKA Nissan Diesel America, Inc.; UD
TRUCKS, CORP., FKA Nissan Diesel
Motor Co., Ltd,

              Defendants-Appellees.

                    Appeal from the United States District Court
                            for the District of Montana
                    Donald W. Molloy, District Judge, Presiding

                        Argued and Submitted July 7, 2016
                              Seattle, Washington

Before: KLEINFELD, McKEOWN, and M. SMITH, Circuit Judges.

      Montana Trucks, LLC, (Montana Trucks) appeals from the district court’s

grant of summary judgment in favor of UD Trucks North America, Inc. (UD

Trucks NA), and UD Trucks, Corp. (UD Trucks).

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
1.    We reach the same conclusion as the district court regarding the limitation of

remedies provision. It bars Montana Trucks’s claim for consequential damages for

breach of contract. Montana Trucks argues that this provision should not be

enforced because it is unconscionable. Both parties agree that Texas law applies to

Montana Trucks’s contract claims under the choice-of-law provision. Under Texas

law, Montana Trucks must show that the contract provision is both procedurally

and substantially unconscionable. See Ski River Dev., Inc. v. McCalla, 167
S.W.3d 121, 136 (Tex. App. 2005). Montana Trucks showed neither. That

Montana Trucks was offered the contract on a take it or leave it basis does not, by

itself, establish that the bargaining procedure was unfair. In re AdvancePCS

Health L.P., 172 S.W.3d 603, 608 (Tex. 2005) (holding that “[a]dhesion contracts

are not automatically unconscionable”). This was a commercial agreement

between sophisticated parties. Because the provision limited consequential

damages for both UD Trucks NA and Montana Trucks, the provision did not

“render the . . . agreement so one-sided as to be substantively unconscionable.” In

re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006).

      The clause bars recovery by either party of “consequential damages,

incidental damages, or other indirect or special damages or loss.” But it does not

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bar recovery for general damages. See Tex. Bus. & Com. Code Ann. § 2.714(a)

(permitting the recovery of “the loss resulting in the ordinary course of events from

the seller’s breach”).

      Accordingly, in dismissing the contract claim of Montana Trucks in its

entirety, the district court interpreted the contractual provision too broadly. We

affirm dismissal to the extent that plaintiff seeks “consequential damages,

incidental damages, or other indirect or special damages or loss.” We reverse

insofar as the plaintiff seeks damages for “the loss resulting in the ordinary course

of events from the seller’s breach.” Id.

2.    “To determine the applicable substantive law, a federal court sitting in

diversity applies the choice-of-law rules of the forum.” Narayan v. EGL, Inc., 616
F.3d 895, 898 (9th Cir. 2010) (citation omitted). While the district court was right

at the time to conclude that Montana law applied to Montana Trucks’s tort claims,

the Montana Supreme Court’s subsequent decision in Masters Group International,

Inc. v. Comerica Bank requires reversal. 352 P.3d 1101, 1115–16 (Mont. 2015).

The court in Masters Group held a choice-of-law provision similar to the provision

at issue in this case encompassed both tort and contract claims. And as in Masters

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Group, this was a transaction between sophisticated parties. Under Masters Group,

the choice-of-law provision applies to Montana Trucks’s tort claims arising out of

performance of the contract as well as contract claims, and the choice-of-law

provision stipulates Texas law.

       The district court concluded under Montana law that February 1, 2010, was

the last date Montana Trucks’s fraud claim could have accrued. Montana Trucks

filed suit on February 15, 2012. Since Texas’s statue of limitations for fraud is

four years, Montana Trucks’s claim of fraud was still timely. Tex. Civ. Prac. &

Rem. Code Ann. § 16.004(a)(4). We reverse and remand to the district court on

Montana Trucks’s claim of fraud against UD Trucks NA for reconsideration in

light of Masters Group. We also reverse and remand on Montana Trucks’s claim

for fraud against UD Trucks, without prejudice to its post-Masters Group argument

that since it was not a party to the contract, Montana Trucks’s claims against it are

barred by the Montana statute of limitations.

3.    Because Montana Trucks’s claims for fraud may be timely, Montana

Trucks’s request for punitive damages is potentially viable. We reverse and

remand to the district court, without prejudice.

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4.    We reverse and remand to the district court to reconsider, in light of Masters

Group, whether Montana Trucks’s claims of constructive fraud and negligent

misrepresentation are barred by the applicable Texas statute of limitations.

AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

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