Court Opinion

ID: 3033293
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:49:17.506285+00
Date Added: 2024-06-11T12:17:08.555415
License: Public Domain

FILED
                             NOT FOR PUBLICATION                                FEB 18 2010

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

                             FOR THE NINTH CIRCUIT

STEVEN TROY VALDEZ, an individual,                 No. 08-55674

              Plaintiff - Appellant,               D.C. No. CV 06-448-CJC (MLG)

  v.
                                                   MEMORANDUM *
PHILIP NEUMAN, an individual; HILO
AT CAMPBELL HALL ASSOCIATES,
LLC, a New York limited liability
company,

              Defendants - Appellees.

                     Appeal from the United States District Court
                        for the Central District of California
                     Cormac J. Carney, District Judge, Presiding

                       Argued and Submitted February 2, 2010
                                Pasadena, California

Before: B. FLETCHER, PREGERSON, and GRABER, Circuit Judges.

       Plaintiff Steven Troy Valdez appeals the judgment against him after a bench

trial in his suit for contract rescission. We vacate in part, affirm in part, and

remand.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
I.    Rescission

      The meaning of “assume” is not ambiguous and therefore can be decided as

a matter of law. See Chwialkowski v. Sachs, 834 P.2d 405, 406 (Nev. 1992) (per

curiam) (holding that summary judgment was proper because unambiguous

contractual language can be construed as a matter of law). To “assume” a debt is

to agree to pay that debt when it is due, for assumption of a debt requires

“becom[ing] bound as another is bound.” Black’s Law Dictionary 112 (5th ed.

1979). By interpreting the word “assume” as not creating a duty to pay, the district

court committed legal error. Likewise, it committed legal error by ruling that the

contract “ma[de] no mention of . . . a time table for” payment of debts. The

unambiguous meaning of “assume” created no latitude as to when verified debts

were to be paid; they were to be paid when they were due.1

      Because of this legal error, the district court in its post-trial order made no

express finding as to what the ambiguous term “verification” meant. On the last

day of testimony, however, the district court stated on the record its finding that

“both parties [were] on the same page that this [debt] has to be related to the

business and the beverages.” In context, this statement “provides a sufficient

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         Neuman understood this. He stated during negotiations, “[W]e’re going to
treat [the verified debt] like a bill.”

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understanding of the issues without a remand for further findings” on this issue,

Societe Generale de Banque v. Touche Ross & Co. (In re U.S. Fin. Secs. Litig.),

729 F.2d 628, 630 (9th Cir. 1984), and the district court’s finding is not clearly

erroneous.

      Because the district court did not clearly err in finding that both Valdez and

Neuman understood “verification” to require that his debts be business-related, it

did not clearly err in finding no unilateral mistake. Moreover, nothing in the

evidence suggests that Neuman had reason to know that Valdez expected verified

debts to be paid immediately on demand, whether or not they were due

immediately.

      Nevertheless, the district court — again because of its legal error in

interpreting the term “assume” — did not make any factual finding as to whether

Valdez provided sufficient documentation to verify that his debts were business-

related. Before the district court, the parties submitted voluminous evidence, in the

form of correspondence, invoices and similar documents, and trial and deposition

testimony, concerning Valdez’s attempts to verify his debts. On appeal, Neuman

argues that Valdez never provided verification that his debts were business-related.

(Red Br. at 39-42.) Valdez argues that, even if the contract required verification

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that the debts were business-related, he provided sufficient verification. (Gray Br.

at 14-16.)

      If Valdez did provide sufficient verification that certain debts were business-

related, and if Neuman did not pay those debts when they were due, then Neuman

breached the contract. Such a breach may constitute a failure of performance

entitling Valdez to rescission of the contract. See Canepa v. Durham, 153 P.2d
899, 903 (Nev. 1944). Because the district court did not make any findings on

those issues, we vacate its judgment on the question whether Valdez may rescind

for a failure of performance. We remand for further findings on whether

verification was sufficient, whether Neuman failed to pay any verified debts when

due, and whether any resulting breach meets the standard for rescission under

Nevada law. Whether the district court decides to make such findings on the

current record or on a supplemented record is a matter left to its discretion.

II.   Abandonment

      The district court did not clearly err in finding that the parties did not

abandon the Mesa Top agreement by mutual consent. See J.A. Jones Constr. Co.

v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009, 1019 (Nev. 2004) (per curiam)

(addressing contract abandonment); Lyerla v. Watts, 482 P.2d 318, 321 (Nev.

1971) (same). For example, Neuman’s express rejection of Valdez’s offer to

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rescind the contract objectively manifested a lack of consent to abandon the

contract. Nor did the district court clearly err in finding that Defendants did not

acquiesce in Valdez’s subsequent business venture, given that Neuman testified

that he was not aware of the extent of that conflicting agreement. None of

Neuman’s acts was inconsistent with the existence of the Mesa Top agreement

because the agreement did not require the January production run (or any other),

forbid Defendants from engaging in other businesses, or oblige Defendants to

continue operating Mesa Top forever.

      The parties shall bear their own costs on appeal.

      VACATED IN PART, AFFIRMED IN PART, AND REMANDED.

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