Court Opinion

ID: 4227591
Source: CourtListenerOpinion
Date Created: 2017-12-11 21:00:38.138147+00
Date Added: 2024-06-11T07:47:55.768175
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            DEC 11 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

BOFI FEDERAL BANK, a federally                   No.   16-35006
chartered banking institution,
                                                 D.C. No. 2:14-cv-00484-BJR
              Plaintiff-Appellant,

 v.                                              MEMORANDUM*

ADVANCE FUNDING LLC; et al.,

              Defendants-Appellees.

                   Appeal from the United States District Court
                     for the Western District of Washington
                Barbara Jacobs Rothstein, District Judge, Presiding

                          Submitted December 7, 2017**
                              Seattle, Washington

Before: HAWKINS, McKEOWN, and CHRISTEN, Circuit Judges.

      Sheena Venzant entered into an agreement with BofI Federal Bank (the BofI

Agreement) to assign twenty-five annual lottery payments in exchange for a lump

sum. Under Washington law, such an assignment has to be judicially approved.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
RCW § 67.70.100. Before it was, Venzant repudiated her contract with BofI and

entered into a similar arrangement with Advance Funding. Advance petitioned and

received judicial approval for Venzant to assign her annual prize payments to one

of Advance’s business associates. BofI sued Advance and its business associates,

asserting tortious interference with contract and unjust enrichment. The district

court granted summary judgment to Advance, holding that the BofI Agreement

was contrary to public policy and therefore unenforceable. BofI timely appeals.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse. McKown v.

Simon Prop. Grp. Inc., 689 F.3d 1086, 1091 (9th Cir. 2012).

      In this diversity action, we are bound by decisions of the Washington

Supreme Court. Id. “[I]n the absence of such a decision,” our task is to “predict

how the highest state court would decide the issue using intermediate appellate

court decisions, among other sources of authority.” Id. “While [Washington]

recognize[s] an overarching freedom to contract, provisions are unenforceable

where they are prohibited by statute.” Jordan v. Nationstar Mortg., LLC, 185

Wash 2d. 876, 883 (2016). Moreover, “[a] contract that is contrary to the terms

and policy of an express legislative enactment is illegal and unenforceable.”

Tanner Elec. Coop. v. Puget Sound Power & Light Co., 128 Wash. 2d 656, 669

(1996) (citing Vedder v. Spellman, 78 Wash. 2d 834, 837 (1971)).

                                          2
      Washington courts have declined to enforce contracts where the parties have

flouted a statutory requirement or colluded to evade their statutory duties, see, e.g.,

Hammack v. Hammack, 114 Wash. App. 805 (2003); Evans v. Luster, 84 Wash.

App. 447 (1996); Kennedy v. Roda, 41 Wash. App. 177 (1985), but the BofI

Agreement did not transgress “the terms . . . of an express legislative enactment,”

Tanner Elec. Coop., 128 Wash. 2d at 669. In fact, by making judicial approval of

the assignment a condition precedent to obligations under the contract, the BofI

Agreement required compliance with RCW § 67.70.100.1

      Nor was the BofI Agreement hostile to the policy underlying RCW

§ 67.70.100. Washington sought, through the statute, to “extend its parens patriae

protection to lottery winners in order to insulate them from their own human

frailties and the possible excesses to which they might be subjected.” Converse v.

Lottery Comm’n, 56 Wash. App. 431, 436 (1989). The legislature’s fear was that

      1
         The unsatisfied condition precedent would have prevented BofI or Venzant
from demanding immediate performance, but it did not render the contract invalid
or otherwise incapable of supporting a claim for tortious interference. See, e.g.,
Walter Implement, Inc. v. Focht, 107 Wash. 2d 553, 556–57 (1987) (“A condition
precedent is an event occurring subsequent to the making of a valid contract which
must exist or occur before there is a right to immediate performance.”); BG Grp.,
PLC v. Republic of Arg., 134 S. Ct. 1198, 1207 (2014) (condition precedent
determines “when the contractual duty . . . arises, not whether there is a contractual
duty . . . at all”) (citing 13 RICHARD A. LORD, WILLISTON ON CONTRACTS §§ 38:7,
38:4 (4th ed. 2013)).
                                           3
lottery winners might “put[] themselves into debt by assigning excessive amounts

of their winnings to creditors.” Id. Enforcing the BofI Agreement would not

defeat the legislative intent behind RCW § 67.70.100.

       Advance suggests that were the BofI Agreement to be deemed enforceable, a

factoring company could string along a lottery winner “while it ‘shopped’ the deal

or waited for insurance to activate.” According to Advance, such an outcome

offends Washington’s state policy by “favoring the interest of a factoring company

over an individual lottery winner.” This contention is wide of the mark because

BofI and Venzant were equally bound to their contract. See Rekhter v. Dep’t of

Soc. & Health Servs., 180 Wash. 2d 102, 112 (2014) (“Under Washington law,

there is in every contract an implied duty of good faith and fair dealing that

obligates the parties to cooperate with each other so that each may obtain the full

benefit of performance.” (alteration and quotation marks omitted)); CHG Int’l, Inc.

v. Robin Lee, Inc., 35 Wash. App. 512, 515 (1983) (“Each party has an affirmative

good faith obligation to perform conditions precedent to a contract and cannot be

excused from performance of the contract by his own misconduct.”). The factoring

company in Advance’s hypothetical would not be free to relieve itself, expressly or

through artifice, of the obligations it owes to the lottery winner, and BofI did not

try to do so in this case.

                                           4
      Because the validly formed BofI Agreement violated neither the letter nor

the spirit of the Washington statute, it was not unenforceable as contrary to public

policy. We therefore reverse the district court’s order granting summary judgment

in favor of Advance and remand for proceedings consistent with this disposition.

      REVERSED AND REMANDED.

                                          5