Court Opinion

ID: 4021608
Source: CourtListenerOpinion
Date Created: 2016-08-03 20:01:02.102031+00
Date Added: 2024-06-11T07:45:00.429503
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           AUG 03 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

DAVID JOHN TEECE,                                Nos. 14-16439
                                                      14-16536
              Plaintiff - Appellant,
              Cross - Appellee,

 v.                                              D.C. No. 3:13-cv-03603-WHA

KUWAIT FINANCE HOUSE
(BAHRAIN) B.S.C.; ABDULHAKEEM                    MEMORANDUM*
AL-KHAYYAT; ADNAN MALIK;
PAUL MERCER,

              Defendants - Appellees,
              Cross - Appellants.

                   Appeals from the United States District Court
                      for the Northern District of California
                     William Alsup, District Judge, Presiding

                       Argued and Submitted July 20, 2016
                            San Francisco, California

Before: GRABER, and TALLMAN, Circuit Judges, and RAKOFF,** District
Judge.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      **
            The Honorable Jed S. Rakoff, Senior United States District Judge for
the Southern District of New York, sitting by designation.
       David John Teece appeals the district court’s order partially granting

attorney’s fees in his voluntarily dismissed diversity action against Kuwait Finance

House (Bahrain) B.S.C. and three of its foreign officers (collectively “Kuwait

Finance”). Kuwait Finance cross appeals, contending that the district court erred in

reducing the fee award by 50 percent. We have jurisdiction over the appeals under

28 U.S.C. § 1291, and we affirm the district court’s fee award.

       1. The district court had jurisdiction over Kuwait Finance’s motion for

attorney’s fees. After Teece’s voluntary dismissal without prejudice under Federal

Rule of Civil Procedure 41(a)(1), the district court retained jurisdiction over all

collateral matters. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394-95 (1990).

An award of attorney’s fees is a collateral matter. Id. at 396. The rule is well

settled. See, e.g., White v. N.H. Dep’t of Emp’t Sec., 455 U.S. 445, 451 (1982);

Budinich v. Becton Dickinson & Co., 486 U.S. 196, 200 (1988); Int’l Ass’n of

Bridge, Structural, Ornamental, & Reinforcing Ironworkers’ Local Union 75 v.

Madison Indus., Inc., 733 F.2d 656, 658-59 (9th Cir. 1984).

       2. The district court, sitting in diversity, did not abuse its discretion in

finding that Kuwait Finance was a “prevailing party” under California law. When

a contract does not define “prevailing party” or otherwise dictate the availability of

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attorney’s fees after a voluntary dismissal, “a court may base its attorney fees

decision on a pragmatic definition of the extent to which each party has realized its

litigation objectives, whether by judgment, settlement, or otherwise.” Santisas v.

Goodin, 951 P.2d 399, 414 (Cal. 1998). Here, the district court did just that.

      Teece relies on several California cases to support his argument that

attorney’s fees are not available after a voluntary dismissal without prejudice. But

those cases involve claims under California Civil Code § 1717, which expressly

precludes attorney’s fees only when a case is voluntarily dismissed “in any action

on a contract.” See, e.g., Desmarais v. Drummond (In re Estate of Drummond), 56
Cal. Rptr. 3d 691, 696 (Ct. App. 2007). Because Teece’s claims sound in tort, the

claims are not “on a contract” and § 1717(b)(2)’s prohibition on attorney’s fees

does not apply. Santisas, 951 P.2d at 401, 409.

      3. The district court did not err in ruling that the Murabaha Agreement

(“Agreement”) between the parties providing for attorney’s fees was broad enough

to encompass Teece’s tort claims. We agree with the district court that it is

“unreasonable” for Teece to argue that none of Kuwait Finance’s legal fees were

“in connection with, the enforcement of, or preservation of rights under” the

Agreement. But even if Kuwait Finance was not seeking to enforce or preserve

rights under the Agreement, Teece’s inclusion of the Agreement in his initial

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disclosures, and the reference in his complaint to the $3 million investment, would

trigger the provision of the Agreement permitting attorney’s fees for “legal

consultancy . . . in relation” to the Agreement.

       4. The district court did not abuse its discretion in declining to extend

international comity and abstain from ruling on the motion for attorney’s fees. The

district court properly decided only the collateral matter before it, leaving the New

Zealand courts to determine the validity of Teece’s claims and, potentially, the

Agreement. Teece has not identified any conflict between the United States and

New Zealand or Bahraini law that could serve to justify abstention. Mujica v.

AirScan Inc., 771 F.3d 580, 600-03 (9th Cir. 2014), cert. denied, 136 S. Ct. 690

(2015). Nor has Teece shown that the other factors relevant to an international

comity analysis required the district court to invoke the international comity

doctrine. See id. at 603-08.

       5. The district court found that half of the motion practice before it was

directed at vindicating Kuwait Finance’s rights under the Agreement and capped

Kuwait Finance’s award at 50 percent. This decision was neither clearly

erroneous, nor an abuse of discretion.

       Finally, we reject Kuwait Finance’s contention that the attorney’s fees

incurred to preserve its rights under the Agreement were inexplicably intertwined

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with its defense to Teece’s lawsuit in general. The district court provided the

requisite “concise but clear” explanation to justify its decision to award 50 percent

of the attorney’s fees requested. See Hensley v. Eckerhart, 461 U.S. 424, 437

(1983).

      Each party shall bear its own costs on appeal.

      AFFIRMED.

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