Court Opinion

ID: 6931998
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:07:43.131965+00
Date Added: 2024-06-11T16:07:14.054521
License: Public Domain

WILLIAM A. NORRIS, Circuit Judge,
concurring in part and dissenting in part:
I concur in the opinion with one exception. I dissent from Part I.C.l which reverses the summary judgment for Bear Stearns on Eaton Vance’s Seventh Claim for Relief relating to the surety bond. The majority holds that Bear Stearns may be liable for damages under California tort law for breach of duty to the bondholders for failure to ensure that the surety bond was in the form the parties had agreed to.
1. Eaton Vance’s Seventh Claim for Relief is based on the theory that Bear Stearns had a fiduciary duty to the bondholders which it allegedly breached when it failed to assure that the surety bond was in the proper form.1 The majority rejects Eaton Vance’s contention that Bear Stearns had a fiduciary duty to the bondholders (Opinion at 1490-91), but reverses the summary judgment on the Seventh Claim anyway. The majority creates a new theory of liability on the Seventh Claim, a theory that Eaton Vance has not asserted and the parties have neither briefed nor argued. In coming up with its own tort theory under California law, the majority relies solely on treatises which neither Eaton Vance nor Bear Stearns cites.
2. The majority decides that under the tort theory which it has sua sponte injected into the case, Eaton Vance may be entitled to damages even though it has said explicitly that it does not seek damages for Bear Stearns’ alleged breach of duty relating to the surety bond. Eaton Vance seeks only rescission. In its Complaint, Eaton Vance pleads:
By reason of the foregoing, Defendant is hable to Plaintiff for rescission. Plaintiff hereby tenders its Bonds to Defendant and requests that Defendant pay it the consideration paid for such Bonds, plus interest, less the amount of any increase received.
ER at 22.
In its Prayer for Relief, Eaton Vance prays for judgment as follows:
On the Seventh Claim for Relief, for rescission, which includes the consideration paid for the Bonds, plus interest, less the amount of any income received on the Bonds.
ER at 24.
In its Brief on Appeal, Eaton Vance declares: “Eaton Vance did not elect a damages remedy.” Appellant’s Brief, at 47.
Thus Eaton Vance has made a judgment call not to seek damages on the Seventh Claim for Relief. My colleagues substitute for Eaton Vance’s judgment their own judgment that Eaton Vance should have asked for damages on the Seventh Claim.
In sum, my colleagues reverse the summary judgment on the Seventh Claim for Relief by making up and presenting Eaton Vance with a tort theory and a damages remedy that Eaton Vance, with the advice of able counsel, has, for whatever reason, elected not to pursue. I would affirm the summary judgment for Bear Stearns on all claims for relief, including the Seventh.

. The Seventh Claim is captioned: "Breach of Fiduciary Duty with Respect to Release of Bond Proceeds from Construction Fund.” ER at 20.