Court Opinion

ID: 9554333
Source: CourtListenerOpinion
Date Created: 2023-08-08 18:00:44.48559+00
Date Added: 2024-06-11T15:33:38.506173
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        AUG 8 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

KIM CRAMTON,                                    No.    21-17122

                Plaintiff-Appellee,             D.C. No. 2:17-cv-04663-DWL
 v.

GRABBAGREEN FRANCHISING LLC,                    MEMORANDUM*
et al.,

                Defendants-Appellants,
 v.

GULF GIRL SQUARED, INC.,

                Third-Party Plaintiff-
                Appellant.

                   Appeal from the United States District Court
                            for the District of Arizona
                   Dominic W. Lanza, District Judge, Presiding

                       Argued and Submitted May 17, 2023
                               Phoenix, Arizona

Before: NGUYEN and COLLINS, Circuit Judges, and KORMAN,** District
Judge.
Partial Concurrence and Partial Dissent by Judge COLLINS.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Edward R. Korman, United States District Judge for
the Eastern District of New York, sitting by designation.
      Defendants-Appellants Grabbagreen Franchising, LLC, Eat Clean

Operations, LLC (“ECO”), and Keely Newman, and Third-Party Plaintiff-

Appellant Gulf Girl Squared, Inc. (“GGS”) (jointly, “Defendants”) appeal from

various decisions and orders and a final judgment of the district court entered in

favor of Plaintiff-Appellee Kim Cramton (“Cramton”). After several years of

litigation, including cross-motions for summary judgment and a bench trial,

Cramton ultimately prevailed on two of her claims against Defendants, namely that

Defendants failed to repay Cramton an amount due on a note (the “Promissory

Note”) in connection with a business loan from Cramton to ECO, and that

Defendants failed to pay Cramton any wages during portions of 2016 and 2017, in

violation of the Arizona minimum wage law. Defendants now appeal: (1) the

district court’s decision and order granting summary judgment to Cramton on the

Promissory Note claim; and (2) the district court’s dismissal of two of Defendants’

counterclaims on summary judgment. We affirm.

      1. Summary judgment is warranted when “there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250

(1986). This Court reviews grants of summary judgment de novo. See Maner v.

Dignity Health, 9 F.4th 1114, 1119 (9th Cir. 2021). “[V]iewing the evidence in the

light most favorable to the nonmoving party,” the Court must determine “whether

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there are any genuine issues of material fact and whether the district court correctly

applied the relevant substantive law.” Ass’n des Éleveurs de Canards et d’Oies du

Québec v. Bonta, 33 F.4th 1107, 1113 (9th Cir. 2022).

      Cramton provided a loan to ECO as reflected in the Promissory Note

executed on October 27, 2016. The terms of the Promissory Note provided that

ECO owed Cramton $66,527.00 plus 3.5% annualized interest accruing until the

Note was fully paid. The parties do not dispute that the full amount of the

Promissory Note has not been repaid to Cramton.

      The Promissory Note expressly provides that the full amount of the note is

payable on demand if ECO “becomes insolvent or the subject of a voluntary or

involuntary proceeding in bankruptcy, reorganization, or creditor composition.”

ECO filed a voluntary Chapter 7 bankruptcy petition on January 29, 2020. See

Bankruptcy Petition No. 20-11194-EPK (Bankr. S.D. Fla.). By its plain terms, the

Promissory Note therefore became payable to Cramton, at the latest, after that

petition was filed. Defendants have not raised any arguments on appeal

compelling us to disturb the district court’s grant of summary judgment to Cramton

as to breach of the Promissory Note.1

1
 Because we agree with the district court that the Promissory Note was payable on
demand as a result of the ECO bankruptcy, we express no view on whether the
Promissory Note was a negotiable instrument under Arizona law.

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       2. The district court also correctly granted summary judgment as to

Defendants’ counterclaims. The record before us does not contain any disputed

material facts suggesting that Cramton violated the terms of the Confidential

Settlement Agreement and Release (“GGS Release”) among Cramton, Keely

Newman, and GGS. The plain language of the Mutual Releases provision in that

agreement does not foreclose any and all lawsuits by Cramton against each of the

Defendants, but rather only prohibits lawsuits that “relat[e] in any manner, directly

or indirectly to any matter relating to [GGS], each Party’s past and current

ownership of common stock or any other interest in [GGS], each Party’s

employment with [GGS] or otherwise related in any way to the Dispute.”2

       None of Cramton’s ten claims in the operative Amended Complaint relate to

the matters released by the GGS Release. Indeed, Cramton did not name GGS as a

defendant with respect to any of these claims, and GGS was introduced as a party

to the suit only as a third-party plaintiff/counterclaimant. Defendants have not

demonstrated how Cramton’s claims in this action are “directly or indirectly”

related to GGS, to Cramton’s ownership of GGS stock, or her employment by

GGS.

2
  “Dispute” is not defined in the GGS Release but, in the context of that agreement,
relates to the money Cramton was owed when GGS sold three Grabbagreen
franchises. The parties do not contest this understanding, on which the district
court also relied.

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         3. A third issue originally on appeal—the district court’s judgment in favor

of Cramton on the minimum wage claim—has been stayed. Keely Newman is the

only defendant relevant to that claim, and she filed for Chapter 11 bankruptcy after

noticing her appeal in this action. See Bankruptcy Petition No. 22-18912-EPK

(Bankr. S.D. Fla.). Because that bankruptcy petition is still pending, the appeal of

this issue was stayed automatically on January 6, 2023 pursuant to 11 U.S.C.

§ 362(a)(1). See ECF No. 35 (Clerk’s Order). Though Defendants initially argued

that the automatic stay did not apply, counsel for Defendants acknowledged the

stay at oral argument, and noted that the issue was “not before this Court at this

time.”

         Consequently, the Clerk will now administratively close this appeal as to

Keely Newman. No mandate will issue as to Keely Newman in connection with

this administrative closure, and this memorandum disposition does not constitute a

decision on the merits as to Keely Newman. Within 28 days after any change to

the automatic stay’s effect in this appeal, any party may notify this court and move

to reopen the appeal as to Keely Newman or for other appropriate relief.

         AFFIRMED IN PART AND STAYED IN PART.

                                           5                                   21-17122
Cramton v. Grabbagreen Franchising LLC, et al., No. 21-17122             FILED
                                                                          AUG 8 2023
COLLINS, Circuit Judge, concurring in part and dissenting in part:
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
      I concur in the memorandum disposition, except as to Part 2. In Part 2, the

majority affirms the district court’s grant of summary judgment to Plaintiff Kim

Cramton as to Defendants’ third and fifth counterclaims, which involved alleged

breaches of a general release (“Release”) between Cramton, Defendant Keely

Newman, and non-party Gulf Girl Squared, Inc. (“GGS”). Because a rational trier

of fact could conclude that Cramton violated the terms of the Release at least in

part, I would reverse the district court’s grant of summary judgment to Cramton on

those counterclaims and would remand for further proceedings. Therefore, I

respectfully dissent as to Part 2 of the majority’s memorandum disposition.

      In relevant part, the Release prohibits Cramton from bringing any claims

against GGS or Keely Newman that “relat[e] in any manner, directly or indirectly

to any matter relating to [GGS], each Party’s past and current ownership of

common stock or any other interest in [GGS], each Party’s employment with

[GGS] or otherwise related in any way to the Dispute” (emphasis added). As part

of Cramton’s employment with GGS, she was responsible for managing three

Grabbagreen stores owned by GGS, which required her to be physically present in

those stores. In her Amended Complaint, Cramton asserted several employment

claims against Defendants that specifically related to her management duties at
GGS’s Grabbagreen stores, including the requirement that she work in the stores.

For part of the time that Cramton worked for GGS, she was also simultaneously

employed by Defendant Grabbagreen Franchising LLC (“GFL”). However, GFL

did not own any Grabbagreen stores and Cramton’s responsibilities for GFL did

not require her to be physically present at the Grabbagreen stores. Based on such

facts, a reasonable trier could find that Cramton’s store-based claims could only

refer to her work at the GGS stores. Moreover, at her deposition, Cramton

expressly acknowledged that her request for an “accommodation” under the

Americans with Disabilities Act related to her work at the three stores during the

time when they were owned by GGS. On these facts, a trier could readily find that,

in clear violation of the Release, Cramton asserted claims that, at least in part,

“relat[ed] directly or indirectly to any matter relating to . . . [her] employment with

[GGS].”

      In reaching a contrary conclusion, the majority erroneously suggests that the

scope of the Release is limited to the parties’ dispute over “the money Cramton

was owed when GGS sold” the three stores. See Mem. Dispo. at 4 n.2. But that

overlooks the Release’s additional language (quoted above) that clearly embraced

any matters concerning Cramton’s “employment” at those stores. The majority

also states that GGS was not named as a party, see id. at 4, but that overlooks the

fact that the Release expressly extends beyond GGS to its “agents,” “affiliates,”

                                           2
“past and present officers,” and “past and present employees.” At least with

respect to claims asserted by Cramton based on conduct while she was employed at

stores owned by GGS, those terms are broad enough to include Defendants,

including the corporate Defendants.

      Accordingly, I would reverse the district court’s grant of summary judgment

to Cramton as to Defendants’ third and fifth counterclaims and would remand for

further proceedings. I therefore dissent as to Part 2, but I otherwise concur in the

memorandum disposition.

                                          3