Court Opinion

ID: 7797201
Source: CourtListenerOpinion
Date Created: 2022-08-02 20:00:50.707273+00
Date Added: 2024-06-11T16:28:35.279493
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        AUG 2 2022
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PACESETTER CONSULTING, LLC, an                  No.    21-16244
Arizona limited liability company,
                                                D.C. No. 2:19-cv-00388-DWL
                Plaintiff-Appellant,

 v.                                             MEMORANDUM*

HERBERT A. KAPREILIAN, a California
citizen; et al.,

                Defendants-Appellees,

and

DANIEL DUDA, a Florida citizen; et al.,

                Defendants.

                   Appeal from the United States District Court
                            for the District of Arizona
                    Dominic Lanza, District Judge, Presiding

                    Argued in part and submitted July 25, 2022
                               Pasadena, California

Before: TASHIMA, WATFORD, and FRIEDLAND, Circuit Judges.

      Pacesetter Consulting, LLC (“Pacesetter”) appeals from the district court’s

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
grant of summary judgment in favor of AgriCare, Inc. and Tom Avenelis (the

“AgriCare Defendants”); Eastside Packing, Inc., Fruit World Nursery, Inc., and

Craig and Herbert Kapreilian (the “Kapreilian Defendants”); and Mark Bassetti on

all claims raised in Pacesetter’s Third Amended Complaint (“TAC”). Pacesetter

also appeals from the district court’s dismissal of the claims in the TAC against A.

Duda & Sons, Inc. and Duda Farm Fresh Foods, Inc. (the “Duda corporate

entities”) and Daniel Duda for insufficient service of process. We have jurisdiction

under 28 U.S.C. § 1291. We affirm in part and reverse in part.

      1. The district court did not abuse its discretion in declining on evidentiary

grounds to consider two exhibits, the “Ball Declaration” and the “Fact Worksheet,”

that Pacesetter submitted in opposition to Defendants’ summary judgment motions.

See Block v. City of Los Angeles, 253 F.3d 410, 416 (9th Cir. 2001) (“Evidentiary

decisions made in the context of summary judgment motions are reviewed for an

abuse of discretion.”). Regarding the Ball Declaration, the district court

reasonably determined that many of the statements in the declaration referred to

materials outside the record, including to materials allegedly produced through

discovery in the parallel state-court litigation. Because Pacesetter failed to

introduce those materials into the record, the district court was unable to determine

whether any evidence they contained would be admissible at trial. Similarly, the

district court reasonably determined that many other statements in the declaration

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were conclusory and, further, were not based on the personal knowledge of the

declarant, but rather on vague assertions of what he “learned” at some unspecified

time after the events in question. See Fed. R. Civ. P. 56(e) (“An affidavit or

declaration used to support or oppose a motion must be made on personal

knowledge, set out facts that would be admissible in evidence, and show that the

affiant or declarant is competent to testify on the matters stated.”).

      Regarding the Fact Worksheet, the district court reasonably determined that

the document was an inappropriate way to introduce deposition testimony at the

summary judgment stage, given Pacesetter’s failure to include direct quotations

from the relevant depositions or to attach the underlying deposition transcripts and

given its inclusion of argumentative summaries. See Planned Parenthood of

Columbia/Willamette, Inc. v. Am. Coal. of Life Activists, 290 F.3d 1058, 1083 (9th

Cir. 2002) (en banc) (recognizing that the district court has discretion whether to

permit presentation of deposition testimony in the form of summaries); United

States v. Leon-Reyes, 177 F.3d 816, 820 (9th Cir. 1999) (“Summaries are normally

prepared by an interested party and therefore may not be completely accurate or

may be tainted with the preparing party’s bias.”).

      Accordingly, the district court did not abuse its discretion in refusing to

consider the exhibits, and we likewise do not consider them in conducting our

summary judgment analysis.

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      2. Reviewing de novo, and mindful of our obligation to view the evidence in

the light most favorable to Pacesetter, we agree with the district court that

Pacesetter failed to offer any cognizable evidence of damages, and that the

AgriCare Defendants, Kapreilian Defendants, and Bassetti were therefore entitled

to summary judgment. See Weinberg v. Whatcom County, 241 F.3d 746, 751 (9th

Cir. 2001) (“Because [the plaintiff] failed to offer competent evidence of damages,

dismissal on summary judgment was appropriate with respect to all claims for

which [the plaintiff] bore the burden of establishing the amount of actual harm he

suffered.”).

      In a separate lawsuit filed in Arizona state court, Pacesetter won rescission

of the investment contract at issue in this case, including a return of the $400,000

principal with interest and attorney’s fees. In the federal case, Pacesetter seeks

additional relief in the form of damages, but it has vacillated between two different

theories of damages throughout the course of the litigation in the district court. At

various times, Pacesetter has appeared to seek “benefit-of-the-bargain” or “lost-

profit” damages, asserting that it is entitled to up to $63 million—calculated based

on the projected 22.4% annual return over the 25-year investment period that

appeared in the Executive Summary of the materials offering the investment

opportunity. At other times, however, Pacesetter has appeared to seek

“opportunity-cost” damages of an uncertain amount—i.e., damages based on what

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Pacesetter could have earned from other investments if the $400,000 principal had

not been tied up during the investment period.

      Pacesetter cannot prevail under either theory. In its Rule 30(b)(6)

deposition, Pacesetter expressly denied that it was seeking the $63 million in

benefit-of-the-bargain damages in the federal lawsuit. Instead, Pacesetter’s

representative said that he did not have an estimate of damages because he had not

“asked [his expert] to do those calculations for [him] yet.” Because Pacesetter

disclaimed any reliance on a benefit-of-the-bargain theory in its deposition, a

benefit-of-the-bargain approach cannot provide a damages theory sufficient to

survive summary judgment.

      Pacesetter also has not offered any evidence of lost-opportunity-cost

damages. To the contrary, Pacesetter’s representative at its Rule 30(b)(6)

deposition stated that, at the time he made the $400,000 investment, he “had plenty

of money on hand,” agreed that he “could have” and “did make investments in

other things” and was “well able to make any investment [he] want[ed] at any

time,” and affirmed that the $400,000 did not “keep [him] from making other

investments” and did not “keep [him] awake at night, either.” Those concessions

are fatal to Pacesetter’s assertion that it sustained lost-opportunity costs from not

having use of the $400,000 to put toward other investments during the investment

period.

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      Pacesetter does not dispute that the existence of damages is an essential

element of all claims alleged in the TAC. Accordingly, the district court did not

err in granting summary judgment on that basis in favor of the AgriCare

Defendants and Bassetti. For the same reason, we affirm the district court’s grant

of summary judgment in favor of the Kapreilian Defendants, even though the

district court relied on other grounds with respect to them. See Atel Fin. Corp. v.

Quaker Coal Co., 321 F.3d 924, 926 (9th Cir. 2003) (“We may affirm a district

court’s judgment on any ground supported by the record, whether or not the

decision of the district court relied on the same grounds or reasoning we adopt”).

      3. The district court did not err in dismissing the claims in the TAC against

A. Duda & Sons, Inc. and Duda Farm Fresh Foods, Inc. (the “Duda corporate

entities”). Pacesetter acknowledges that service of the First Amended Complaint

(“FAC”) on A. Duda & Sons, Inc. did not satisfy Federal Rule of Civil Procedure

4, because that complaint mistakenly named a non-existent entity, “Duda and Sons,

LLC,” as the defendant. Accordingly, Pacesetter was obligated to comply with

Rule 4 when it served the Second Amended Complaint (“SAC”), which named the

Duda corporate entities for the first time, or when it served the TAC. See Emp.

Painters’ Tr. v. Ethan Enters., Inc., 480 F.3d 993, 995-96 (9th Cir. 2007) (“[A]n

amended complaint can often be served in the same manner as any other pleading

[under Rule 5] if the original complaint is properly served [under Rule 4] and the

                                          6
defendants appeared in the first instance.” (emphasis added)). Because Pacesetter

served the SAC and TAC on attorneys for the Duda corporate entities using the

district court’s electronic docketing system—which is a method permitted by Rule

5, but not by Rule 4, see Fed. R. Civ. P. 5(b)(2)(E)—the district court correctly

dismissed the claims in the TAC against the Duda corporate entities for insufficient

service of process.

      The district court erred, however, in dismissing the claims in the TAC

against Daniel Duda. Daniel Duda was properly served with the FAC under Rule

4. Although the district court dismissed the FAC’s claims against Daniel Duda for

lack of personal jurisdiction, the district court ultimately gave Pacesetter the

opportunity to attempt to cure the jurisdictional defect by granting leave to file the

SAC and TAC. Once proper service of the FAC was accomplished pursuant to

Rule 4, Pacesetter was permitted to serve the later-amended complaints on Daniel

Duda’s attorney through the district court’s electronic filing system, as allowed by

Rule 5. See Emp. Painters’ Tr., 480 F.3d at 999 (noting that an “amended

complaint . . . qualifies as a ‘pleading subsequent to the original complaint,’ thus

allowing it to be served in any manner prescribed in Rule 5(b)” (footnote

omitted)); Fed. R. Civ. P. 5(b)(1), (b)(2)(E).

      Accordingly, we affirm the district court’s dismissal of the claims in the

TAC against the Duda corporate entities, reverse the dismissal of the claims in the

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TAC against Daniel Duda, and remand for further proceedings.

      All parties shall bear their own costs on appeal.

      AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

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