Brady v. Dairy Fresh Products Co.
| Decision Date | 09 September 1992 |
| Docket Number | 90-55507,Nos. 89-56023,s. 89-56023 |
| Citation | 974 F.2d 1341 |
| Parties | NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. Ronald P. BRADY; Vincent Lombardo; Allen Larson; Erling Schlak; Karl Schlak; Henry Jessen; Robert W. Brady; Terrain, Inc., a North Dakota corporation; Gerner, Inc., a North Dakota corporation; Triple J Farms, Inc., a Wyoming corporation, Plaintiffs-Appellants, v. DAIRY FRESH PRODUCTS CO., a California corporation; Sylvester Feichtinger; Escondido Valley Poultry Association; Demler Farms, Inc., a California corporation, Defendants-Appellees. Ronald P. BRADY, an individual; Robert W. Brady, an individual; Karl R. Schlak, an individual; Terrain, Inc., a North Dakota corporation; Erling O. Schlak, an individual; Gerner, Inc., a North Dakota corporation; Henry Jessen, an individual; Evelyn Jessen, an individual; Triple J Farms, a Wyoming corporation; Allen D. Larson, an individual; Vincent Lombardo, an individual, Plaintiffs-Appellants, v. Bennett LITTLE, an individual; Harold O. Wright, an individual; Dairy Fresh Products Co., a California corporation; Demler Farms, Inc., a California corporation; Sylvester Feichtinger, individually and as Trustee of the Maria Feichtinger Family Trust; the ESCONDIDO POULTRY ASSOCIATION, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Before WALLACE, Chief Judge, and JAMES R. BROWNING and FERGUSON, Circuit Judges.
Ronald Brady, Vincent Lombardo, Allen Larson, Erling Schlak, Karl Schlak, Henry Jessen, Evelyn Jessen, Robert Brady, Terrain, Inc., Gerner, Inc., and Triple J Farms, Inc. (the investors) appeal from the district court's summary judgment. The district court granted summary judgment on all counts in favor of Dairy Fresh Products Company (Dairy Fresh), Sylvester Feichtinger, Escondido Valley Poultry Association (Association), and Demler Farms, Inc. (Demler) (collectively defendants). The district court also granted partial summary judgment on several claims in favor of Wright. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We affirm in part and reverse and remand in part.
Wright argues that the investors' notice of appeal is untimely because the district court's summary judgment order was entered as the final judgment on April 21, 1989. The district court's April 21, 1989, order, however, only certifies the summary judgment in favor of the defendants. The final judgment that was subsequently entered by the clerk clearly indicates that the district court was only granting final judgment in favor of the defendants. Therefore, the summary judgment in favor of Wright was not appealable until the district court entered its order on the post-trial motions and the final judgment against Wright on November 14, 1989. Thus, the notice of appeal filed on December 13, 1989, was timely.
The investors also filed a timely notice of appeal as to the defendants pursuant to Federal Rule of Civil Procedure 54(b). On April 21, 1989, the district court made the proper Rule 54(b) certification that there was no just reason for delay and ordered that the October 3, 1988, summary judgment order be entered as the final judgment. The time for appeal, however, did not begin to run until the separate document that contained the final judgment was entered by the clerk on May 16, 1989. Fed.R.Civ.P. 58; Vernon v. Heckler, 811 F.2d 1274, 1276 (9th Cir.1987). Thus, the notice of appeal filed on June 15, 1989, was timely, and we can properly review the propriety of the summary judgment.
We review a summary judgment de novo. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339 (9th Cir.1989). We must determine "whether, viewing the evidence in a light most favorable to the nonmoving party, there are any genuine issues of material fact and whether the district court applied the relevant substantive law." Id. at 1339-40.
The investors argue that the district court erred in granting summary judgment because it relied solely on the Special Master's Findings of Fact (SMFF) and ignored substantial deposition testimony, affidavits, and other written evidence. The summary judgment order, however, indicates that the district court considered the parties' motions and supplemental papers. The parties appended numerous declarations and exhibits to these submissions. Moreover, the SMFF cited to numerous deposition transcripts, exhibits, and other submissions by the parties. Therefore, it appears that the district judge properly analyzed all of the facts brought to its attention by the investors.
The investors argue that the district court erred in granting summary judgment against Lombardo and Robert Brady on counts three, four, and fourteen. The investors have failed to show that the defendants or Wright made any misrepresentations to Lombardo or Robert Brady concerning the Campo II or III transactions. The investors, however, argue that the defendants and Wright may be held liable because they failed to disclose the change of user problem. Section 1572 of the California Civil Code establishes liability for "[t]he suppression of that which is true, by one having knowledge or belief of the fact." Cal.Civ.Code § 1572 (West 1982). The investors argue that knowledge of the change of user problem can be inferred because Haney, Ronald Brady's accountant, met with Dairy Fresh to discuss the transactions. The investors point out that at some point after this meeting, Haney indicated to Brady that he must ensure that the user is changed. However, the investors have presented no evidence that the change of user requirement was actually discussed during these meetings or that the defendants or Wright otherwise discovered the change of user problem.
The investors further argue that the defendants and Wright were reckless in not discovering the problem. The plain language of section 1572, however, requires that the defendants have knowledge of the fact not disclosed. See Continental Airlines, Inc. v. McDonnell Douglas Corp., 216 Cal.App.3d 388, 404, 264 Cal.Rptr. 779 (1989) (Continental Airlines ). To the extent that the California courts construe the term knowledge to encompass recklessness, there is no evidence that the defendants or Wright was reckless merely because they did not investigate or otherwise discover the change of user problem.
The investors also argue that knowledge of the change of user problem can be imputed to the defendants and Wright because Little was their agent. However, when Little was making the relevant representations he was acting as the agent of the investors. Therefore, no knowledge should be imputed to the defendants or Wright. See People v. Park, 87 Cal.App.3d 550, 566, 151 Cal.Rptr. 146 (1978).
The investors also incorrectly argue that the defendants and Wright should be held secondarily liable because Little was their agent. The investors provided no evidence that Little was Wright's actual or ostensible agent. Actually, the evidence indicates that Little was acting in his fiduciary capacity as an investment counselor to the investors when Little made the misrepresentations concerning the tax benefits to the investors. The investors have not shown that the defendants or Wright caused Robert Brady or Lombardo to believe that Little was acting as the defendants' agent rather than the investors' agent when making these representations. The investors fail to argue clearly and distinctly or present any case law indicating that liability is appropriate in this unique situation. See International Union of Bricklayers & Allied Craftsmen Local Union No. 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir.1985) (International Union ).
The investors also contend that the defendants and Wright should be held liable because they were engaged in a joint venture with Little. However, the investors have produced no evidence, other than Feichtinger's unilateral statement, that there was an actual joint venture or partnership relating to the Campo transactions with Little on one side and Wright or the defendants on the other side.
There is also no need to address the agency relationship between Wright and the defendants. Wright has made no actionable fraudulent misrepresentation or omission that can be imputed to the defendants.
Ronald Brady argues that the district court erred in granting Wright and the defendants' motion for summary judgment on count three. Brady argues that his reliance on Little's representations was reasonable because Little allayed any doubts that Brady had concerning the Campo investments. Brady also argues that the adverse information he received from others was not of a character to influence him. Ronald Brady, however, was specifically informed by his accountant that unless he actually received change of user documentation he would be exposed to liability. Little attempted to allay Brady's fears by stating that an actual change of user would occur or paperwork could be made to look like a change of user occurred. When this statement is considered in light of the information and warnings that Brady received from his accountants, it is clear that Brady did not reasonably rely on Little's statements. See 5 B. Witkin, Summary of California Law § 712 (9th ed. 1988).
Brady also argues that he should not be held responsible for the information discovered through his investigation because where a confidential or fiduciary relationship exists, the principal is not required to undertake an investigation at all. Brady, however, chose to conduct an investigation and discovered that there was a change of user problem with the investment. The fiduciary...
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...to supervise because of the parties' failure to point out facts that would justify such application. Brady v. Dairy Fresh Products Co., 974 F.2d 1341 at *7 (9th Cir. 1992). The court's refusal to extend the standard to those circumstances does not cast doubt on the viability of extending it......