Court Opinion

ID: 3033308
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:49:19.046158+00
Date Added: 2024-06-11T15:03:52.736606
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                                NOT FOR PUBLICATION                                    FEB 18 2010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

 PRUDENCE CORPORATION,                                  No. 08-56759

               Plaintiff/Appellee,
                                                        D.C. No. CV-07-00555-AG-RNB
   v.
                                                        MEMORANDUM *
 SHRED-IT AMERICA, INC.,

               Defendant/Appellant.

                      Appeal From the United States District Court
                          for the Central District of California
                      Andrew J. Guilford, District Judge, Presiding

                               Submitted February 11, 2010 **
                                   Pasadena, California

Before: THOMAS and SILVERMAN, Circuit Judges, and BEISTLINE, *** Chief
District Judge.

        Shred-it America, Inc. (SAI) appeals the district court’s judgment in favor of

         *
              This disposition is not appropriate for publication and is not precedent except as
provided by 9th Cir. R. 36-3.
         **
             The panel unanimously concludes this case is suitable for decision without oral
argument. See Fed. R. App. P. 34(a)(2).
         ***
                The Honorable Ralph R. Beistline, United States District Judge for the District of
Alaska, sitting by designation.

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Prudence Corporation (Prudence) in Prudence’s diversity action alleging breach of

a franchise agreement between SAI, the franchisor, and Prudence, the franchisee.

The district court determined that SAI had breached the franchise agreement by

failing to timely submit proposed renewal terms to Prudence. The district court

ordered the renewal of the franchise agreement under specific performance and

declaratory relief, and awarded attorneys’ fees and costs to Prudence. SAI

challenges the court’s finding of breach, and argues that the court’s order of

specific performance constitutes an improper rewriting of the contract. We

disagree.

      There is substantial evidence to support the court’s finding of breach. SAI’s

delay of well over a year in even attempting to renew the franchise agreement was

entirely unreasonable and harmful to Prudence. None of SAI’s excuses for delay

are legitimate.

      Moreover, the district court acted properly when it ordered specific

performance at the original royalty rate. According to the express terms of the

franchise agreement, where a party improperly withholds its approval of any action

provided for in the contract, specific performance is the proper remedy. Therefore,

the court had discretion to fashion an equitable remedy of specific performance, and

it did not abuse that discretion when it ordered renewal at the original royalty rate.

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See Rogers v. Davis, 34 Cal. Rptr. 2d 716, 720 (Cal. Ct. App., 1994) (quoting

Restatement (First) of Contracts, § 359(2)) (noting that “a ‘decree [of specific

performance] need not be absolute in form, and the performance that it requires

need not be identical with that promised in the contract; it may be so drawn as best

to effectuate the purposes for which the contract was made, and it may be granted

on such terms and conditions as justice requires.’”); see also Restatement (Second)

of Contracts § 358(1). Furthermore, by improperly delaying renewal of the

agreement, SAI waived its right to negotiate more generous terms than those

provided for in the original agreement. See Engalla v. Permanente Med. Group,

Inc., 938 P.2d 903, 924 (Cal. 1997) (holding that a party’s “course of delay” in

performing the terms of the contract, when “unreasonable or undertaken in bad

faith, may provide sufficient grounds” for a finding of waiver).

      The award of fees and costs should also be upheld. According to Cal. Civ.

Code § 1717(a), all attorneys’ fees provisions in the contract are made reciprocal

between the parties. Also, any fees provisions which are limited to certain sections

of the contract must be applied to the entire contract “unless each party was

represented by counsel in the negotiation and execution of the contract, and the fact

of that representation is specified in the contract.” Cal. Civ. Code § 1717(a). The

franchise agreement does not specifically note that the parties were represented by

                                          3
counsel. Thus, the provisions that permit SAI to collect attorney's fees in certain

instances are made applicable to this suit won by Prudence. The award of fees and

costs was therefore proper.

      AFFIRMED.

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