Court Opinion

ID: 218173
Source: CourtListenerOpinion
Date Created: 2011-06-07 00:02:16+00
Date Added: 2024-06-11T17:28:35.256200
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                              JUN 06 2011

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

DENNIS GALLAGHER; SHELLY                         No. 10-15784
GALLAGHER,
                                                 D.C. No. 2:08-cv-3071-JFM
              Plaintiffs - Appellants,

    v.                                           MEMORANDUM*

TERRY J. HOLT, now known as Terry
Jan Mace; JERRI A. WELLS, now known
as Jerri A. Carsello,

              Defendants - Appellees.

                   Appeal from the United States District Court
                       for the Eastern District of California
                   John F. Moulds, Magistrate Judge, Presiding

                       Argued and Submitted May 13, 2011
                            San Francisco, California

Before: O’SCANNLAIN and GOULD, Circuit Judges, and ST. EVE, District
Judge.**

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
         **
            The Honorable Amy J. St. Eve, United States District Judge for the
Northern District of Illinois, sitting by designation.
      Plaintiffs Dennis and Shelly Gallagher appeal the district court’s order

granting Defendants’ motion for summary judgment as to the Gallaghers’ action

for damages for breach of contract. Plaintiffs do not appeal the district court’s

ruling granting Defendants’ motion for summary judgment as to the Gallaghers’

action for specific performance. As the facts and procedural history are familiar to

the parties, we do not recite them here except as necessary to explain our

disposition.

      We review a district court’s grant of summary judgment de novo. See

Florer v. Congregation Pidyon Shevuyim, N.A., -- F.3d --, 2011 WL 1441879, at

*3 (9th Cir. Apr. 15, 2011) (citing Fed. Trade Comm’n v. Stefanchik, 559 F.3d

924, 927 (9th Cir. 2009)). In doing so, we view the evidence in the light most

favorable to the nonmoving party, and determine both whether any genuine dispute

as to any material fact exists and whether the district court correctly applied the

substantive law. See id.

      The district court erred in finding as a matter of California law that, to obtain

damages for breach of contract, a plaintiff must prove adequate consideration. The

California Civil Code (“the Code”) provides that consideration is an essential

element of a contract. Cal. Civ. Code § 1550. It further provides that “[a]ny

benefit conferred, or agreed to be conferred, upon the promisor, by any other

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person, to which the promisor is not lawfully entitled, or any prejudice suffered, or

agreed to be suffered, by such person, other than such as he is at the time of

consent lawfully bound to suffer, as an inducement to the promisor, is a good

consideration for a promise.” Id. at § 1605 (emphasis added).

      The adequacy of consideration is relevant to the question whether a

promisee can compel a party to perform under a contract. The Code provides that

“[s]pecific performance cannot be enforced against a party to a contract . . . [i]f he

has not received an adequate consideration for the contract.” Id. at § 3391. This

provision limits the equitable remedies available to a plaintiff who establishes

breach of a contract, but who does not establish that adequate consideration

supports the same. Section 3391, however, does not purport to limit a plaintiff’s

right to obtain common-law damages for breach of contract, for which good

consideration exists.

      It is well established in California that, to maintain an action at law for

breach of contract, one need only prove the existence of consideration, rather than

its adequacy. See, e.g., Kremen v. Cohen, 337 F.3d 1024, 1028 (9th Cir. 2003)

(“The adequacy of consideration doesn’t matter, but it must be ‘something of real

value.’”) (quoting Herbert v. Lankershim, 9 Cal. 2d 409, 475 (1937)); Walters v.

Calderon, 25 Cal. App. 3d 863, 876 (1972) (distinguishing the “legal consideration

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necessary to sustain an action for damages” from “the amount of consideration

required in an equitable action for specific performance”); Brandolino v. Lindsay,

269 Cal. App. 2d 319, 324 (1969) (observing that “the court may award damages if

plaintiffs are not entitled to specific performance”) (citations omitted); see also

Farnsworth v. Hunter, 11 Cal. 2d 27, 32 (1938) (“It cannot be said that appellant

was prejudiced by the fact that[,] in order to establish inadequacy of consideration

as a defense to specific performance, she was compelled to show a high value of

the property and thus prove, by her own evidence, plaintiffs’ right to damages.”);

Pascoe v. Morrison, 219 Cal. 54, 58-59 (1933) (“The complaint in the present case,

without any reference to the question of specific performance, adequately alleges,

in a separate count, a cause of action for damages based on the respondent’s breach

of the agreement. . . . Appellant’s abortive attempt to procure a decree specifically

enforcing an agreement which, as we have seen, cannot be specifically enforced,

should not of itself preclude him from obtaining relief by way of damages.”).

      The district court relied on the 1931 decision of the California Court of

Appeals in Cushing v. Levi, 117 Cal. App. 94, 102-03 (1931), for the proposition

that a plaintiff must allege and prove adequate consideration to obtain damages for

breach of contract. To the extent that Cushing purports to stand for this principle,

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it is no longer good law. This necessarily follows from the contrary precedent of

the Supreme Court of California, other California case law, and the Code.

      Because the district court erred in granting Defendants’ motion for summary

judgment as to Plaintiffs’ action for damages for breach of contract, we reverse.

      Costs are awarded to Plaintiffs-Appellants.

      REVERSED.

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