Court Opinion

ID: 217589
Source: CourtListenerOpinion
Date Created: 2011-05-27 00:01:47+00
Date Added: 2024-06-11T17:28:33.002074
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              MAY 26 2011

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

                            FOR THE NINTH CIRCUIT

ALEJANDRO LOPEZ, a married man in                No. 09-17417
his sole & separate right,
                                                 D.C. No. 4:03-cv-00167-JMR
       Plaintiff - Appellee,

  v.                                             MEMORANDUM *

MUSINORTE ENTERTAINMENT
CORPORATION, a New Mexico
corporation; HURACANES, INC., a
California corporation; HERACLIO
GARCIA, husband; ROSA GARCIA,
wife; FRANCISCO GARCIA, husband;
IRMA GARCIA, wife; JESUS GARCIA, a
single man; GUADALUPE GARCIA,
husband; LOS HURACANES DEL
NORTE, an Arizona partnership,

       Defendants - Appellants,

and

DORA LETICIA GARCIA, wife

       Defendant.

ALEJANDRO LOPEZ, a married man in                No. 10-16637
his sole & separate right,

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                 D.C. No. 4:03-cv-00167-JMR
              Plaintiff - Appellee,

  v.

MUSINORTE ENTERTAINMENT
CORPORATION, a New Mexico
corporation; HURACANES, INC., a
California corporation; HERACLIO
GARCIA, husband; ROSA GARCIA,
wife; FRANCISCO GARCIA, husband;
IRMA GARCIA, wife; JESUS GARCIA, a
single man; GUADALUPE GARCIA,
husband; DORA LETICIA GARCIA,
wife; LOS HURACANES DEL NORTE,
an Arizona partnership,

              Defendants - Appellants.

                    Appeal from the United States District Court
                             for the District of Arizona
                      John M. Roll, District Judge, Presiding

                       Argued and Submitted May 11, 2011
                            San Francisco, California

Before: B. FLETCHER and THOMAS, Circuit Judges, and ROSENTHAL,
District Judge.**

       In Case No. 09-17417, Musinorte Entertainment Corporation and others

(collectively “Musinorte”) appeal the district court’s judgment, following a jury

       **
            The Honorable Lee H. Rosenthal, District Judge for the U.S. District
Court for Southern Texas, Houston, sitting by designation.

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trial, in favor of Alejandro Lopez in Lopez’s diversity action. In a consolidated

appeal, Case No. 10-16637, Musinorte challenges the district court’s award of

attorney fees under Arizona Revised Statute § 12-341.01. We affirm the district

court’s judgment in Case No. 09-17417. We vacate the district court’s award of

fees in Case No. 10-16637. Because the parties are familiar with the history of the

case, we need not recount it here.

                                           I

      The district court did not err in rejecting Musinorte’s statute of limitations

defense and declining to apply the defenses of laches and mitigation of damages.

Under the discovery rule used in Arizona, “a cause of action does not accrue until

the plaintiff knows or with reasonable diligence should know the facts underlying

the cause.” Doe v. Roe, 955 P.2d 951, 960 (Ariz. 1998). The district court’s

determination that Lopez’s cause of action did not accrue until he was officially

expelled from the band in 2001 was not clearly erroneous. See Shultz v. Dep’t of

Army, 886 F.2d 1157, 1159 (9th Cir. 1989) (“When the question of accrual of the

statute of limitations turns on what a reasonable person should know, it is, like

negligence, a mixed question of fact and law reviewed for clear error.”); Fed. R.

Civ. Pro. 52(a)(6) (a district court’s finding of fact “must not be set aside unless

clearly erroneous”).

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      Because the cause of action did not accrue until 2001, Lopez’s decision to

bring suit in 2003 was not unreasonable or prejudicial, and Musinorte’s laches

argument fails. See Mathieu v. Mahoney, 851 P.2d 81, 84 (Ariz. 1993).

      Lopez “had no duty to mitigate until [he] actually discovered the damage

done to [him]” in 2001. Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d

1322, 1329 (9th Cir. 1995). Therefore, the district court did not err in rejecting

Musinorte’s failure to mitigate defense.

                                           II

      Contrary to Musinorte’s contention, the record provides “evidence adequate

to support the jury’s conclusion” of liability under the unjust enrichment theory

and the amount of damages awarded. E.E.O.C. v. Go Daddy Software, Inc., 581

F.3d 951, 963 (9th Cir. 2009) (internal quotation marks and citation omitted). The

jury was properly instructed on the elements, and Lopez presented evidence as to

each required element. He tendered evidence of the Musinorte’s enrichment from

profits, his impoverishment from only being paid a salary instead of twenty percent

of the royalties, his status, and the lack of justification for the impoverishment and

enrichment because there was no contractual or any other legal basis for the Garcia

brothers to distribute all the royalties to themselves.

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      The district court did not err in concluding that there was no adequate

remedy at law. Under Arizona law, a plaintiff can pursue an unjust enrichment

claim as an alternative theory of recovery in conjunction with a breach of contract

claim, subject, however, to only one recovery. Trustmark Ins. Co. v. Bank One, 48

P.3d 485, 492-93 (Ariz. Ct. App. 2002). Because the jury rejected Lopez’s

partnership and contract claims, and was instructed to address only the unjust

enrichment claim if it rejected the first claims, there was no double recovery. Id.

      We conclude there was no reversible error in the jury’s finding as to joint

and several liability. Because Musinorte failed in the Rule 50(a) motion to

sufficiently articulate the joint and several liability issue, see Wallace v. City of San

Diego, 479 F.3d 616, 620 (9th Cir. 2007), we review only for plain error, see Go

Daddy Software, Inc., 581 F.3d at 961. Musinorte cannot meet this “extraordinary

deferential” standard because they have not alleged, and cannot show, a “manifest

miscarriage of justice.” Id. at 961-62 (internal quotation marks and citations

omitted). Applying the appropriate standard of review, we conclude that there was

sufficient evidence in the record to support the verdict.

      The district court did not err in ordering an equitable accounting despite the

jury’s rejection of Lopez’s partnership theory. Under Arizona law, “[i]t is not . . .

essential to the right to an accounting that a legal partnership exist. If the persons

                                           -5-
stood in a mutual and confidential relation to each other, and had a joint interest in

the result of an adventure, either may demand an accounting . . . .” Mollohan v.

Christy, 294 P.2d 375, 376-77 (Ariz. 1956) (internal quotation marks and citation

omitted). Because the jury found that Lopez was entitled to twenty percent of the

band’s profit and “future royalties paid for recordings on which Lopez performed,”

the district court did not abuse its discretion in determining that a mutual and

confidential relationship existed and ordering an equitable accounting.

                                          III

      In Case No. 10-16637, Musinorte argues that the district court erred in

awarding attorney fees under Arizona Revised Statute § 12-341.01(A). We agree.

Arizona Revised Statute § 12-341.01(A) permits a court to award attorney fees in

“any contested action arising out of a contract, express or implied.” Lopez alleges

his claim arose under the contracts between the recording companies and the band.

Although Lopez was a party to some of these recording contracts, they are not the

contracts under which Lopez’s suit arose. Instead, Musinorte’s duty to distribute

profits to Lopez existed without such a contract. See, e.g., Morris v. Achen Const.

Co., 747 P.2d 1211, 1213 (Ariz. 1987) (rejecting claim for fees under § 12-

341.01(A) based on fraudulent inducement cause of action because “[t]he duty not

to commit fraud is obviously not created by a contractual relationship and exists . .

                                          -6-
. even when there is no contractual relationship between the parties at all”).

Musinorte’s duty to avoid unjust enrichment is more closely akin to an implied-in-

law contract, which the Arizona Supreme Court has expressly ruled does not

qualify under § 12-341.01(A). See Barmat v. John and Jane Doe Partners A-D,

747 P.2d 1218, 1220-22 (1987) (finding that implied-in-law contracts arising from

professional relationships are insufficient under § 12-341.01(A)). Because the

district court erred in awarding fees under § 12-341.01(A), we vacate the award

and remand to the district court for further proceedings.

      AFFIRMED IN PART, VACATED IN PART, AND REMANDED.

Each party shall bear its own costs.

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