General Ins. Co. of America v. Nicolaci
| Decision Date | 31 August 1990 |
| Docket Number | No. 89-35792,89-35792 |
| Citation | 912 F.2d 468 |
| Parties | Unpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. GENERAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee, v. Domenick NICOLACI, Defendant-Appellant, Jane Doe Nicolaci, husband and wife and marital community composed thereof, Defendant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Before WRIGHT, BEEZER and TROTT, Circuit Judges.
Alleging fraud in the inducement, Domenick Nicolaci seeks to escape obligations to his guarantor, appellee General Insurance Company. We AFFIRM the district court's grant of summary judgment in favor of General Insurance but REVERSE and REMAND for recalculation of interest payments.
Appellant Nicolaci, a resident of Massachusetts, claims that Abedon, his trusted advisor of many years, defrauded him into buying a partnership interest in "Quail Oaks Associates." Over the years, Abedon allegedly represented himself to Nicolaci as an attorney, judge, and an expert in complex insurance, investment, estate planning, and tax shelters. Nicolaci asserts that he relied on Abedon so much that he regularly signed papers presented to him without reading them.
Nicolaci paid for his interest in Quail Oaks with a cash down payment and a promissory note payable to the partnership. The partnership obtained a loan from Midland Bank. As collateral for the loan, the partners pledged their promissory notes and they obtained a limited partnership guaranty bond issued by General Insurance Company, a Washington state corporation. In return for General's guaranty bond, General required the partners to sign indemnification agreements to indemnify General personally in the event it had to make payments under the bond.
As allegedly was his custom, Nicolaci signed the indemnification agreement without having seen any more of it than the signature page.
Nicolaci defaulted on his promissory note, apparently after becoming suspicious about the quality of the investment. As a result of his default, Marine Midland Bank made demand on General under the limited partnership guaranty bond. General allegedly paid approximately $122,000 to Marine Midland Bank on behalf of Nicolaci. General then brought suit under the indemnification agreement in the Western District of Washington to recoup payments made to the bank due to Nicolaci's default.
Nicolaci raised a defense of fraud in the inducement, arguing that his signature on the indemnification agreement had been falsely procured by Abedon. The court granted summary judgment to General under the theory that Nicolaci had anticipatorily repudiated the agreement. It concluded that Nicolaci had failed to raise a genuine issue of material fact as to whether Abedon's alleged fraud was connected to General. The district court's damage award required Nicolaci to make the final two payments on the promissory note, including unaccrued interest.
We review de novo the district court's order of summary judgment. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, 110 S.Ct. 3217 (1990).
Nicolaci makes several arguments on appeal which we discuss below. Crucial to nearly all of his arguments is the question whether Abedon's alleged defrauding of Nicolaci has any bearing on Nicolaci's obligations to General. We consider this question first.
Nicolaci argues that his advisor, Abedon, acted as an agent for General in procuring Nicolaci's signature on the Indemnification Agreement. We cannot agree. Abedon was neither an actual agent of General nor someone who possessed apparent authority to act as General's agent.
As the district court correctly pointed out, Nicolaci presented no evidence that Abedon and General had agreed to confer upon Abedon the authority to make representations about the wisdom of the Quail Oaks investment. Even if Abedon was General's agent for the very limited purpose of procuring Nicolaci's signature upon the indemnification agreement, that purpose is wholly unrelated to the allegedly fraudulent Quail Oaks investment scheme. In sum, General should not suffer the consequences for any alleged fraud committed by Abedon.
The Washington standard for apparent authority requires that the principal put an agent in a situation in which a reasonable person would assume that the latter was authorized to engage in a specific form of conduct. See Lamb v. General Assoc., 60 Wash.2d 623, 627-28, 374 P.2d 677 (1962).
We fail to see how this standard can be met here because Nicolaci claims to have had no idea that he was signing an indemnification agreement with General. E.g., ER 8 at 2-5.
Nicolaci's reliance upon the Eleventh Circuit's decision in Borg-Warner Leasing v. Doyle Elec. Co., Inc., 733 F.2d 833 (11th Cir.1984), is unpersuasive. In Borg-Warner, the defendant had read the lease and thus could have inferred that the broker, although independent, was acting on behalf of the computer owner for purposes of the single transaction.
Forum selection clauses are "prima facie valid and should be enforced unless" they are shown to be unreasonable. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Applying Bremen, this court will enforce such a provision as being a meaningful expression of the expressed intent of the dealing parties absent evidence of "fraud, undue influence, overweening bargaining power, or such serious inconvenience in litigating in the selected forum so as to deprive [the resisting party] of a meaningful day in court." Pelleport Investors v. Budco Quality Theaters, 741 F.2d 273, 280 (9th Cir.1984) (citing Bremen, 407 U.S. at 12-19).
Given our conclusion that General's rights under the indemnification agreement are insulated from any alleged fraud on Abedon's part, we conclude the forum selection clause is reasonable and should be enforced. 1
Nicolaci also argues that summary judgment was improperly granted because a factual question exists as to whether the indemnification agreement was part of a package of fraudulent documents. Alternatively, he argues that if the issue is not one of fact, then it is one of law and he is then entitled to summary judgment because it is "undisputed" that his signature on the contracts was induced by fraud. He relies on a Second Circuit case, National Union Fire Insurance v. Turtur, 892 F.2d 199 (2d Cir.1989), as support for his argument that the contracts should be construed together.
General counters that the panel need not reach this issue because Nicolaci waived it, having raised it first on this appeal. It also attacks his reliance upon Turtur.
We exercise our discretion in considering the issue for the first time on appeal. See Telco Leasing, Inc. v. Transwestern Title Co., 630 F.2d 691, 693 (9th Cir.1980) ().
Again, however, we conclude that General's insulation from any alleged fraud by Abedon is fatal to Nicolaci's argument. 2
The district court concluded correctly that Nicolaci anticipatorily repudiated the indemnification agreement.
Anticipatory repudiation occurs when a party to a contract either expressly or impliedly repudiates a contract prior to the time of performance. E.g., Lovric v. Dunatov, 18 Wash.App. 274, 282, 567 P.2d 678 (1977); Marr Enterprises, Inc. v. Lewis Refrigeration Co., 556 F.2d 951, 956 (9th Cir.1977). It is a harsh remedy and a party's intent to repudiate should be illustrated by positive statements or actions, not by doubtful or indefinite statements, indicating unequivocal refusal, or inability to substantially perform. Lovric, supra; Marr Enterprises, supra.
Nicolaci's intent was clear from his missed payments on the promissory note and his claims of fraud in the inducement. He did not bother to respond to the anticipatory repudiation argument made in General's motion for summary judgment. 3
Transfers under 28 U.S.C. Sec. 1404(a) are delegated to a district court's discretion. Lou v. Belzberg, 834 F.2d 730, 734 (9th Cir.1987), cert. denied, 485 U.S. 993, 108 S.Ct. 1302 (1988). "Where the court has considered all relevant public and private interest factors, and where its balancing of these factors is...
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