Court Opinion

ID: 204266
Source: CourtListenerOpinion
Date Created: 2011-02-08 01:03:10+00
Date Added: 2024-06-11T17:27:43.379900
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                              FEB 07 2011

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

RICHARD EDWARDS, D.B.A.                          No. 09-55890
Eurotrading,
                                                 D.C. No. 3:07-cv-01826-JMA
              Plaintiff - Appellant,

  v.                                             MEMORANDUM*

SYMBOLIC INTERNATIONAL, INC.,

              Defendant - Appellee.

                   Appeal from the United States District Court
                      for the Southern District of California
                    Jan M. Adler, Magistrate Judge, Presiding

                          Submitted December 7, 2010**
                              Pasadena, California

Before: NOONAN, BERZON, and CALLAHAN, Circuit Judges.

       Plaintiff-appellant Richard Edwards, a foreign citizen, who does business as

“Eurotrading” (“Edwards”) appeals from the district court’s grant of summary

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
judgment to defendant-appellee Symbolic International, Inc. (“Symbolic”).1 The

district court concluded, as a matter of law, that by failing to timely pay the

balance due on the contract, Edwards was in material breach and that the liquidated

damages clause was valid, enforceable and reasonable, therefore summary

judgment for Symbolic was appropriate. We affirm.

      A district court’s grant of summary judgment is reviewed de novo. See, e.g.,

F.T.C. v. Network Servs. Depot, Inc., 617 F.3d 1127, 1138 (9th Cir. 2010). The

court must determine, viewing the evidence in the light most favorable to the

nonmoving party, whether there are any genuine issues of material fact and

whether the district court correctly applied the relevant substantive law. Balint v.

Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).

      Under the applicable California contract law, a party may rescind a contract

“[i]f the consideration for the obligation of the rescinding party, before it is

rendered to him, fails in a material respect from any cause.” Cal. Civ. Code § 1689

(b)(4). “Delay in performance is a material failure only if time is of the essence,

i.e., if prompt performance is, by the express language of the contract or by its very

nature, a vital matter.” Johnson v. Alexander, 134 Cal. Rptr. 101 (Cal. Ct. App.

      1
            Because the parties are familiar with the facts of this case, we repeat
them here only as necessary to the disposition of this case.
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1976) (citing, inter alia, Henck v. Lake Hemet Water Co., 9 Cal. 2d 136, 143

(1937). Edwards concedes that he failed to pay the $2.8 million balance on August

13, 2007, the payment date specified in the contract, but he argues that because

time was not of the essence, the district court erred in finding there was a material

breach of contract. We conclude, however, that pursuant to the parties’ pre-

contract communications and negotiations, as well as the contract terms, time was

of the essence. Henck, 9 Cal. 2d at 143 (“The general rule of equity is that time is

not of the essence of the contract, unless it clearly appear from the terms of the

contract, in the light of all the circumstances, that such was the intention of the

parties.”).

       Specifically, (1) in the pre-contract negotiations, Symbolic repeatedly

rejected the thirty working-day time period that Edwards sought to pay the balance

and insisted on the shorter thirty calendar-day time period to ensure the balance

was paid on or before August 13; (2) Edwards agreed to the August 13 date and it

is the date specified in the contract; (3) prior to Edwards’ failure to pay, a

Symbolic representative repeatedly advised Edwards that time was of the essence;

and (4) prior to August 13, Symbolic sent Edwards the “Notice to Complete,”

which advised him that in order for the transaction to be deemed completed, the

balance was due by August 13 or Symbolic would keep the $300,000 deposit “by

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way of liquidated damages for breach of contract.” Edwards’ breach by non-

payment on the date the balance for the Ferrari was due was therefore material.

      Although Edwards contends that the parties’ negotiations and intentions as

to whether time was of the essence raise disputed issues of material fact, he fails to

explain how these allegedly disputed issues “might affect the outcome of the suit

under the governing law.” Anderson, 477 U.S. at 248. First, “the mere state of

mind of the parties—with reference to the ‘meeting of the minds’—is not the

essential object of inquiry, the terms of the promise act being determinable by an

external and not by an internal standard.” Zurich General Acc. & Liab. Assur. Co.,

Ltd. v. Industrial Acc. Com., 132 Cal. App. 101,104 (1933)(citations omitted).

Regardless of Edwards’ intentions as to when he might pay, after negotiating with

Symbolic over the due date he accepted Symbolic’s proposed date of August 13

and had his solicitor prepare the contract with that date. Moreover, there is no

legal basis for Edwards’ argument that Symbolic breached the contract by sending

its “Notice to Complete” letter before the due date for the balance because the

contract does not indicate when the notice to complete must be given. In sum,

Edwards has not raised any material issue of fact as to whether he breached the

contract. Matsushita Electrical Industrial Co., Ltd. v. Zenith Radio Corp., 475

                                          4
U.S. 574 (1986) (nonmoving party “must do more than simply show that there is

some metaphysical doubt as to the material facts”).

      Edwards further asserts that even if he breached the contract, the contract’s

liquidated damages provision was unreasonable. Liquidated damages provisions

are favored in California and are enforceable unless it was “unreasonable under the

circumstances existing at the time the contract was made.” California Civil Code §

1671(b); see also Weber, Lipshie & Co. v. Christian, 52 Cal. App. 4th 645, 654

(1997). Here, the parties were sophisticated buyers and sellers of high-end vintage

cars who agreed to a liquidated damages clause equivalent to 10% of the price of

the Ferrari. There was evidence that this was the standard practice in the industry.

Viewed under the circumstances at the time of contracting, see id., the liquidated

damages provision was reasonable and therefore, as a matter of law, applied to

Edwards when he breached the contract. We also reject Edwards’ claim that the

resolution of the liquidated damages issues should have been submitted to the jury

rather than be decided by the district court because under California law, it is clear

that “[t]he question whether a contractual provision is an unenforceable liquidated

damages provision is one for the court.” Morris v. Redwood Empire Bancorp, 128

Cal. App. 4th 1305, 1314 (2005) (citation omitted).

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      Finally, Edwards’ contention that the district court erred by impermissibly

weighing the evidence and acting as a trier of fact is not supported by the record.

The record indicates that the court was properly determining whether there were

genuine issues of material fact that precluded summary judgment. Balint, 180 F.3d

at 1054 (“This court does not weigh the evidence or determine the truth of the

matter, but only determines whether there is a genuine issue for trial.”).

      The district court’s order granting summary judgment to Symbolic is

AFFIRMED.

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