Court Opinion

ID: 4406130
Source: CourtListenerOpinion
Date Created: 2019-06-12 20:00:51.386142+00
Date Added: 2024-06-11T14:36:38.515863
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 12 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

SENTINEL OFFENDER SERVICES, LLC,                No.    17-55559
a Delaware limited liability company,
                                                D.C. No.
                Plaintiff-Appellant,            8:14-cv-00298-JLS-JPR

 v.
                                                MEMORANDUM*
G4S SECURE SOLUTIONS, INC., A
Florida corporation,

                Defendant-Appellee.

SENTINEL OFFENDER SERVICES, LLC,                No.    17-55785
a Delaware limited liability company,                  17-55987

                Plaintiff-Appellee,             D.C. No.
                                                8:14-cv-00298-JLS-JPR
 v.

G4S SECURE SOLUTIONS, INC., A
Florida corporation,

                Defendant-Appellant.

                   Appeal from the United States District Court
                       for the Central District of California
                   Josephine L. Staton, District Judge, Presiding

                       Argued and Submitted May 17, 2019

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                                 Pasadena, California

Before: NGUYEN and OWENS, Circuit Judges, and BAYLSON,** District Judge.

      In this appeal and cross-appeal, both parties challenge the district court’s

ruling and award of damages and attorneys’ fees following a bench trial. Appellant

and Cross-Appellee Sentinel Offender Services, LLC, (“Sentinel”) appeals the

district court’s damages award as insufficient. Appellee and Cross-Appellant G4S

Secure Solutions (USA), Inc., (“G4S”) appeals the district court’s decision on

liability in favor of Sentinel and its award of attorneys’ fees to Sentinel.

      Sentinel sued G4S for breach of contract, fraud, and negligent

misrepresentation based on alleged statements and omissions related to Sentinel’s

acquisition of G4S’s subsidiary, G4S Justice Services, LLC (“Justice”).

Specifically, Sentinel alleged that G4S misrepresented that Justice had a “good

probability” of winning a pending bid for a contract, and deliberately withheld that

Justice’s bid did not comply with mandatory technical specifications. Sentinel sued

G4S when, following Sentinel’s acquisition of Justice, it did not obtain the

contract.

      After a bench trial, the district court found G4S liable for fraud and

negligent misrepresentation but not breach of contract. The district court awarded

      **
             The Honorable Michael M. Baylson, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.

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Sentinel $456,328 in compensatory damages and awarded Sentinel attorneys’ fees

as the prevailing party.

      The district court had subject-matter jurisdiction under 18 U.S.C. § 1332.

This Court has jurisdiction under 28 U.S.C. § 1291.

      We have considered the following issues and affirm.

      1.     G4S argues that the district court erred when it concluded that G4S

was liable for fraud and negligent misrepresentation. G4S contends that its “good

probability” statement was not a misrepresentation, or, alternatively, that the

misrepresentation was not actionable because it was merely an opinion. Sentinel

responds that the factual record supports the district court’s conclusion.

      We review the district court’s findings of fact for clear error. Freeman v.

Allstate Life Ins. Co., 253 F.3d 533, 536 (9th Cir. 2001). After careful review of

the record, and in light of the standard of review, we reject G4S’s argument. The

district court found that G4S’s misrepresentation was actionable based on its

credibility assessment of the witnesses at trial. We cannot say that the district court

committed clear error in its credibility findings. These credibility assessments,

along with the sufficient evidence in the record cited by the district court, support

our conclusion that the district court did not clearly err in holding G4S liable to

Sentinel for fraud and negligent misrepresentation.

      2.     Sentinel argues that the district court’s award of damages was

                                           3                                      17-55559
insufficient and erroneous. It first contends that the district court employed the

incorrect standard of damages as a matter of law when it applied California Civil

Code section 3333, requiring modification of the judgement or, alternatively, a

new trial limited to damages. Sentinel argues that the district court should have

instead applied California Civil Code section 3343, the standard of damages for

fraud by a non-fiduciary. Additionally, Sentinel contends that the district court

erred in its calculation of damages. Sentinel argues that the district court’s award

should have included the mezzanine financing it obtained to cover the purchase

price.

         G4S responds that the district court applied the standard of damages

proposed by Sentinel, and thus that Sentinel should be judicially estopped from

raising an argument on this issue. Moreover, G4S contends that any error in

calculating damages was harmless because the standard applied by the district

court, section 3333, is broader than section 3343, the standard Sentinel now argues

should have been applied. Finally, G4S asserts that the district court’s calculation

of damages was not clearly erroneous.

         Initially, we conclude that any error in the district court’s choice to evaluate

damages under section 3333 was invited by Sentinel. Sentinel’s Proposed Findings

of Fact and Conclusions of Law proposed that the district court apply section 3333

in awarding damages for fraud. United States v. Reyes-Alvarado, 963 F.2d 1184,

                                             4                                     17-55559
1187 (9th Cir. 1992), as amended (June 15, 1992) (“The doctrine of invited error

prevents a [party] from complaining of an error that was his own fault.”). We also

agree that any error in the district court’s application of section 3333 was harmless

because that section uses a “broader” measure of damages than section 3343.

Alliance Mortgage Co. v. Rothwell, 44 Cal. Rptr. 2d 352, 361 (1995).

      We review the district court’s computation of damages under the clearly

erroneous standard. Sutton v. Earles, 26 F.3d 903, 918 (9th Cir. 1999).

      We do not find clear error in the district court’s calculation of damages. The

district court properly concluded that, notwithstanding G4S’s fraud, Sentinel was

not entitled to the entire amount of the lost contract. Rather, the district court

reasonably fashioned a measure of damages based upon the value Sentinel had

agreed to assign to other pending bids, as proposed by G4S’s expert witness. Under

this calculation, the district court awarded Sentinel a portion of the amount

Sentinel paid to acquire Justice, not only which accounted for the fact that there

had been a misrepresentation and an omission, but also for the fact that Sentinel

knew that there was no guarantee that Justice would win the pending contract. This

was a proper out-of-pocket damages calculation, as required under California law.

      Moreover, it was within the district court’s discretion to decline to award

damages for the interest paid by Sentinel for mezzanine financing. The district

court properly considered this element of proposed damages, and was not required

                                           5                                     17-55559
by California law to award it. We affirm the district court’s award of damages.

      3.     Finally, G4S asserts that the district court erred in imposing attorneys’

fees in favor of Sentinel. G4S contends that, because it was successful on the

contract claim, it should have been awarded attorneys’ fees as the prevailing party

on the contract under California Civil Code section 1717. Sentinel responds that

the district court properly found that it was the prevailing party under California

Code of Civil Procedure section 1032. Both parties appear to agree that the

“litigation objectives” test is the proper method for designating a prevailing party.

      We review the district court’s award of attorneys’ fees for abuse of

discretion. Armstrong v. Davis, 318 F.3d 965, 970 (9th Cir. 2003).

      The district court carefully considered California law on the issue of

attorneys’ fees and discussed both section 1717 and section 1032 at length. It then

appropriately concluded that Sentinel achieved more of its “litigation objectives”

than G4S because it obtained a “net monetary recovery.” The district court did not

abuse its discretion in awarding attorneys’ fees to Sentinel. Accordingly, we affirm

the district court’s award of attorneys’ fees.

      AFFIRMED.

                                           6                                   17-55559