Court Opinion

ID: 3170137
Source: CourtListenerOpinion
Date Created: 2016-01-15 22:00:47.595316+00
Date Added: 2024-06-11T12:02:41.730704
License: Public Domain

NOT FOR PUBLICATION                          FILED
                     UNITED STATES COURT OF APPEALS                       JAN 16 2016
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

    GENESIS MERCHANT PARTNERS, LP,               No. 13-56797
    a Connecticut corporation,
                                                 D.C. No. 3:11-cv-01589-JM-WVG
             Plaintiff - Appellant,

      v.                                         MEMORANDUM *

    NERY'S USA, INC., a Nevada corporation;
    JOHN CATHCART, an individual;
    COMMERCIAL TARGA, S.A. DE C.V., a
    Mexican corporation,

             Defendants - Appellees.

    GENESIS MERCHANT PARTNERS, LP,               No. 13-57106
    a Connecticut corporation,
                                                 D.C. No. 3:11-cv-01589-JM-WVG
             Plaintiff - Appellant,

      v.

    NERY'S USA, INC., a Nevada corporation;
    JOHN CATHCART, an individual;
    COMMERCIAL TARGA, S.A. DE C.V., a
    Mexican corporation,

             Defendants - Appellees.

*
      This disposition is not appropriate for publication and is not precedent except
as provided by 9th Cir. R. 36-3.
                  Appeal from the United States District Court
                      for the Southern District of California
                Jeffrey T. Miller, Senior District Judge, Presiding

                    Argued and Submitted December 10, 2015
                             Pasadena, California

Before: PREGERSON, CALLAHAN, and HURWITZ, Circuit Judges.

   Genesis Merchant Partners, LP, appeals the district court’s judgment, and award

of attorneys’ fees, in favor of Nery’s USA, Inc., Commercial Targa, and John

Cathcart. We have jurisdiction under 28 U.S.C. § 1291, vacate the judgment, and

remand for further proceedings.

      1. The district court’s finding that Nascent breached the Stock Purchase

Agreement (the “Agreement”) by failing to indemnify Nery’s for certain obligations

of Targa is supported by substantial evidence. But, the court erred by entering a

judgment that allowed Nery’s to retain the Targa stock that was the subject of the

Agreement while excusing payment of the balance of the promissory note Nery’s

gave Nascent in return. Under California law, a party “injured by a breach of

contract” may either “disaffirm the contract, treating it as rescinded, and recover

damages resulting from the rescission,” or “affirm the contract . . . and recover

damages for breach of contract.” Wong v. Stoler, 188 Cal. Rptr. 3d 674, 680 (Ct.

App. 2015). The district court’s judgment does not comport with either of these

recognized remedies for breach of contract.

                                        2
      2. Freedman v. Rector, Wardens & Vestrymen of St. Mathias Parish, 230
P.2d 629 (Cal. 1951), does not support the remedy ordered below. That case refuses

to enforce, as a penalty, a liquidated damages provision in a real estate contract,

instead holding that the vendee could recover restitution if his down payment

exceeded the vendor’s damages. Id. at 631, 633. That the vendee’s anticipatory

breach excused the vendor’s obligation to sell the property in that case, id. at 631,

does not suggest that Nascent’s breach both excused Nery’s from its obligations

under the note and simultaneously allowed it to retain the benefits of the Agreement.

      3. Genesis does not dispute that any damages for Nascent’s breach of its

contractual duty to indemnify should be offset against the note. We therefore

remand for assessment of those damages.1

      4. Fees may be granted to the “party who is determined to be the party

prevailing on the contract.” Cal. Civ. Code § 1717(a). Because we vacate the

judgment, we also vacate the fee award without prejudice to the district court

awarding fees after entry of a new judgment.

1
   We leave to the district court the decision whether those damages should be
determined solely on the existing record. We also leave to the district court whether
Nery’s is entitled to a new election of remedies after contractual damages are
calculated, and if Nery’s is allowed to rescind the Stock Purchase Agreement,
whether Genesis has a claim for unjust enrichment arising out of Nery’s ownership
of Targa before the rescission.

                                         3
VACATED and REMANDED

                       4