Court Opinion

ID: 148849
Source: CourtListenerOpinion
Date Created: 2010-06-17 22:17:56+00
Date Added: 2024-06-11T17:24:08.727553
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             JUN 17 2010

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                      U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

PROSKAUER ROSE, LLP, a New York                  No. 07-56463
limited liability partnership,
                                                 D.C. No. CV-06-04040-GW
       Plaintiff-counter-defendant-Appellee,

  v.                                             MEMORANDUM *

BLIX STREET RECORDS, INC., a
Washington corporation; et al.,

   Defendants-counter-plaintiffs-
Appellants,

  v.

BERT DEIXLER,

       Third-party-defendant-Appellee.

PROSKAUER ROSE, LLP, a New York                  No. 08-55794
limited liability partnership,
                                                 D.C. No. 2:06-cv-04040-GW-
       Plaintiff-counter-defendant-Appellee,     VBK

  v.

BLIX STREET RECORDS, INC., a

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Washington corporation; et al.,

     Defendants-counter-claim-3rd-party-
plaintiffs-Appellants.

                    Appeal from the United States District Court
                       for the Central District of California
                     George H. Wu, District Judge, Presiding

                      Argued and Submitted February 3, 2010
                               Pasadena, California

Before: KLEINFELD, WARDLAW and CALLAHAN, Circuit Judges.

      In these consolidated appeals, Blix Street Records, Inc. (“Blix Street

Records”) and its sole shareholder, William Straw, appeal the grant of summary

judgment in No. 07-56463 and jury verdict awarding fees in favor of Proskauer

Rose LLP (“Proskauer”) and Bert Deixler in No. 08-55794. We have jurisdiction

pursuant to 29 U.S.C. § 1291. We affirm.

      1. The district court correctly held that Straw lacks standing. See Pareto v.

FDIC, 139 F.3d 696, 699-700 (9th Cir. 1998). Straw was a cross-defendant in the

underlying lawsuit. Because Straw was successful in defending against the

plaintiffs’ claims against him individually, obtaining a complete release of the

plaintiffs’ claims without paying any money, Straw as an individual did not have

any damages resulting from Proskauer’s alleged malpractice. Straw, as an

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individual shareholder of Blix Street Records, also lacks standing to complain of

injury to the corporation. That the value of Straw’s shares may have been

diminished is insufficient to demonstrate standing. Id. Nor does the fact of

Straw’s personal liability to Proskauer for fees create standing to assert a

malpractice claim.

      2. The district court correctly granted summary judgment in favor of

Proskauer and Deixler on Blix Street Records’ malpractice claim.1 Deixler, a

partner of Proskauer, represented Blix Street Records and Straw in a dispute

arising from a 1997 licensing agreement between Blix Street Records and the

parents of late recording artist Eva Cassidy (the “Cassidys”). That dispute, which

the parties ultimately settled, involved a charge that Blix Street Records

fraudulently concealed royalty payments it owed to the Cassidys by

misrepresenting a license agreement with a third party to be a distribution

agreement. Blix Street Records now asserts that Deixler breached his duty of care

by coercing Straw to settle that case after the third party produced a Blix Street

Records tax record that supported the Cassidys’ position that the third party

      1
        We grant Appellants’ Requests for Judicial Notice, filed on March 12,
2008, and December 15, 2009, respectively. We also grant Appellees’ Request for
Judicial Notice, filed on April 23, 2008.

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arrangement was a license agreement, for which Blix Street Records owed the

Cassidys additional royalty payments. During the resulting reopening of Straw’s

deposition, moreover, Straw testified that the income reflected in the tax record

was for a licensing—not distribution—agreement. Following the discovery of the

tax record and Straw’s deposition testimony, Deixler informed Straw that he no

longer believed that Blix Street Records had a strong case. The district court

correctly held that this was not a breach of the duty of care that would rise to the

level of malpractice. See Dawson v. Toledano, 109 Cal. App. 4th 387, 397 (Ct.

App. 2003).

      The district court also correctly held that Deixler did not breach his duty of

care when he told Straw, based on the new evidence and testimony, that he did not

“relish” going to trial. Cf. People v. Castillo, 233 Cal. App. 3d 36, 59-60 (Ct. App.

1991) (noting that the mere desire not to go to trial for pecuniary reasons cannot

constitute an attorney conflict of interest).

      The district court properly awarded summary judgment to Proskauer.

Although a factual dispute exists as to whether certain advice given by Deixler and

Deixler’s refusal to follow Straw’s instructions were each appropriate, Blix Street

Records failed to establish the elements of causation and damages critical to a

malpractice claim. See Viner v. Sweet, 30 Cal. 4th 1232, 1241 (2003). Blix Street

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Records failed to “establish that but for [Deixler’s] negligence . . . [Blix Street

Records] would have obtained a more favorable judgment or settlement in the

action in which the malpractice allegedly occurred.” Id. Blix Street Records

points to no evidence demonstrating that it is more likely than not the Cassidys

would have settled on more favorable terms but for Deixler’s alleged negligence.

Marshak v. Ballesteros, 72 Cal. App. 4th 1514, 1518 (Ct. App. 1999).

      3. The district court did not abuse its discretion in denying Blix Street

Records’ Rule 56(f) request for additional discovery. Natural Res. Def. Council v.

Houston, 146 F.3d 1118, 1132-33 (9th Cir. 1998). None of the additional

discovery requests related to the elements of causation and damages. Therefore,

Blix Street Records failed to “show how allowing additional discovery would have

precluded summary judgment.” Id. at 1133.

      4. The district court did not abuse its discretion in denying Blix Street

Records’ motion for leave to assert a breach of contract claim after the judgment

was entered. Lindauer v. Rogers, 91 F.3d 1355, 1357 (9th Cir. 1996). “[A]fter

final judgment has been entered, a Rule 15(a) motion may be considered only if the

judgment is first reopened under Rule 59 or 60.” Id. Blix Street Records failed to

move to reopen under Rule 60, and as explained below, the district court did not

err in denying Blix Street Records’ Rule 59(e) motion.

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      5. Nor did the district court abuse its discretion in denying Blix Street

Records’ Rule 59(e) motion to alter, amend, or vacate the judgment. See Dixon v.

Wallowa County, 336 F.3d 1013, 1022 (9th Cir. 2003). Blix Street Records’ claim

that Proskauer had a conflict of interest during the mediation because it had

wrongfully failed to produce documents Blix Street Records had provided, in the

district court’s words, “requires a leap of fancy” to support a conspiracy to induce

Blix Street Records into a disadvantageous settlement. Moreover, Blix Street

Records could not even identify which documents Proskauer supposedly failed to

produce.

      6. Because we affirm the award of summary judgment in favor of

Proskauer, we also affirm the subsequent award of fees and interest to the firm.

      AFFIRMED.

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