Court Opinion

ID: 178980
Source: CourtListenerOpinion
Date Created: 2010-11-09 01:02:53+00
Date Added: 2024-06-11T17:25:46.750537
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             NOV 08 2010

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

                            FOR THE NINTH CIRCUIT

ATLAS EQUITY, INC.,                              No. 09-55466

              Plaintiff - Appellant,             D.C. No. 8:06-cv-00602-GW

  v.
                                                 MEMORANDUM *
CHASE BANK USA, N.A., FKA Chase
Manhattan Bank USA, National
Association, a national banking
association,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     George H. Wu, District Judge, Presiding

                     Argued and Submitted November 1, 2010
                              Pasadena, California

Before: SCHROEDER, TALLMAN and M. SMITH, Circuit Judges.

       Plaintiff-Appellant Atlas Equity, Inc. (Atlas) sued Defendant-Appellee

Chase Bank USA (Chase) for allegedly breaching the parties’ contracts governing

the sale of consumer credit card debt. As the facts and procedural history are

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
familiar to the parties, we do not recite them here except as necessary to explain

our disposition. We have jurisdiction under 28 U.S.C. § 1291, and we affirm the

district court.

I.     Breach of Contract

       The written contracts are governed by Delaware common law, not the

Delaware Uniform Commercial Code (UCC). Delaware’s UCC Article 2 does not

apply because Atlas purchased debts, not goods. See Del. Code tit. 6, § 2-105(1);

see also 2 Lary Lawrence, Lawrence’s Anderson on the Uniform Commercial

Code, § 2-105:64 & nn. 1, 10 (3d ed. Supp. 2010) (stating that Article 2 does not

apply to sales of accounts receivable and loan agreements). Delaware’s UCC

Article 9 does not apply to “an assignment of accounts . . . which is for the purpose

of collection only.” Del. Code tit. 6, § 9-109(d)(5).

       Although Atlas contends that the parties’ emails constitute separate contracts

that supercede the parties’ written contracts, Atlas has failed to introduce any

evidence to establish that the parties exchanged emails subsequent to the time that

they executed the written contracts. See, e.g., Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586–87 (1986) (stating that summary judgment

“opponent must do more than simply show that there is some metaphysical doubt

as to the material facts”). Because the written contracts are fully integrated

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documents, the parties’ prior email discussions may not be used to supplement or

supercede the written agreements. See Carrow v. Arnold, No. 182-K, 2006 WL

3289582, at *4–5 (Del. Ch. Oct. 31, 2006), aff’d, 933 A.2d 1249 (Del. 2007)

(unpublished table decision) (adopting lower court’s reasoning).

      The contracts clearly and unambiguously provide Chase with full discretion

to “determine which Charged-off Accounts shall be eligible for sale.” Chase’s

power to select the accounts necessarily included the power to select the aggregate

amount of the accounts’ balances. Although the December 2003 contract required

Chase to sell at least $10,000,000 in account balances, there is no dispute that

Chase satisfied this obligation.

      Finally, the written contracts clearly and unambiguously provide that Chase

had the power to sell to Atlas’s competitors.

II.   Breach of Implied Covenant of Good Faith and Fair Dealing

      Atlas’s arguments regarding the implied covenant of good faith and fair

dealing seek to add contract terms that contradict the unambiguous provisions of

the written contracts. The implied covenant cannot be used to “grant the plaintiffs,

by judicial fiat, contractual provisions that they failed to secure for themselves at

the bargaining table.” Aspen Advisors LLC v. United Artists Theatre Co., 861 A.2d

                                          -3-
1251, 1260 (Del. 2004). The district court properly rejected the cause of action for

breach of the implied covenant.

III.   Leave to File Third Amended Complaint

       Atlas failed to show good cause when it requested that the district court

revise its scheduling order and permit Atlas to file a third amended complaint.

Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294–95 (9th Cir. 2000). Because

Atlas failed to show that it diligently sought to amend its complaint, the district

court did not abuse its discretion in denying Atlas’s request. See id. at 1295.

       AFFIRMED.

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