Champion Produce, Inc. v. Ruby Robinson Co., Inc.

• Decision Date: 08 September 2003
• Docket Number: No. 01-35887.,No. 01-35893.,01-35887.,01-35893.
• Citation: 342 F.3d 1016
• Parties: CHAMPION PRODUCE, INCORPORATED, an Idaho corporation, Plaintiff-Appellant, v. RUBY ROBINSON CO., INC., a corporation, Defendant-Appellee. Champion Produce, Incorporated, an Idaho corporation, Plaintiff-Appellee, v. Ruby Robinson Co., Inc., a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

342 F.3d 1016

CHAMPION PRODUCE, INCORPORATED, an Idaho corporation, Plaintiff-Appellant, v. RUBY ROBINSON CO., INC., a corporation, Defendant-Appellee.

Champion Produce, Incorporated, an Idaho corporation, Plaintiff-Appellee, v. Ruby Robinson Co., Inc., a corporation, Defendant-Appellant.

No. 01-35887.

No. 01-35893.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 6, 2003 — Seattle, Washington.

Filed September 8, 2003.

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Terry C. Copple and Terri R. Yost, Davison, Copple, Copple & Copple, Boise, Idaho, for the plaintiff-appellant/appellee.

Rex Blackburn, Evans & Keane, and Robert M. Andalman, III, Altheimer & Gray, Chicago, Illinois, for the defendant-appellee/appellant.

Appeal from the United States District Court for the District of Idaho; Larry M. Boyle, Magistrate Judge, Presiding. D.C. No. CV-00-00383-LMB.

Before: STEPHEN REINHARDT, WILLIAM A. FLETCHER and RONALD M. GOULD, Circuit Judges.

OPINION

WILLIAM A. FLETCHER, Circuit Judge.

The cross appeals in this diversity case arise out of a breach of contract. Each party appeals aspects of the district court's post-judgment order. We affirm. Among other things, we hold that the cost-shifting provision of Federal Rule of Civil Procedure 68 does not permit an award of post-offer attorneys' fees when the underlying state statute authorizes an award of attorneys' fees to a prevailing party as part of costs, but when the party seeking attorneys' fees under the rule is not a prevailing party within the meaning of that statute.

I. Background

Champion Produce, Inc. ("Champion") grows and packages produce, which it then sells to buyers throughout the United States. Ruby Robinson Co. ("Ruby") buys produce from companies like Champion, which it resells to retailers and restaurants. In August 1999, Champion and Ruby entered a contract under which Ruby agreed to purchase onions from Champion during the 1999-2000 onion season. The following June, Champion filed suit against Ruby in Idaho state court, alleging that Ruby had breached the contract and seeking $338,137.09 in damages, plus prejudgment interest, attorneys' fees, and costs. Ruby removed to federal court based on diversity of citizenship.

After removal but before entry of judgment, Ruby made Champion an offer of judgment of $150,000 pursuant to Federal Rule of Civil Procedure 68. Rule 68 provides that "a party defending a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued." If the offeree rejects the offer, and "the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after making the offer." Fed.R.Civ.P. 68. Ruby's Rule 68 offer explicitly stated that it was "inclusive of all interest, costs, attorneys fees or other amounts that Champion could claim in this matter against Ruby."

Champion rejected Ruby's offer. After trial, the jury returned a verdict for Champion for $103,513.75, substantially less than both the damages sought in the complaint ($338,137.09) and Ruby's offer of judgment ($150,000). The jury also answered special interrogatories, in which it stated that Ruby was in breach but also that the contract had been partially waived or modified.

Pursuant to Federal Rule of Civil Procedure 59(e), Champion moved to amend the judgment to include $12,421.65 in prejudgment interest, as well as $41,794.85 in costs and attorneys' fees incurred prior to Ruby's Rule 68 offer. The inclusion of these amounts in the judgment would have resulted in a judgment larger than Ruby's Rule 68 offer, and thus would have avoided cost-shifting under the rule. Champion also moved to amend the judgment to include post-offer costs and attorneys' fees. The district court denied Champion's motions.

Ruby moved for an award of post-offer costs and attorneys' fees under Rule 68. The district court granted Ruby's motion for post-offer costs. It refused, however, to award post-offer attorneys' fees.

Both parties timely appealed. Champion contends that the district court: (1) erred in denying its motion for prejudgment interest, and for pre-offer costs and pre-offer attorneys' fees; (2) erred in denying its motion for post-offer costs and post-offer attorneys' fees; and (3) erred in granting Ruby's motion for post-offer costs. Ruby contends the district court erred in denying its motion for post-offer attorneys' fees.

We review a denial of prejudgment interest under state law for abuse of discretion. Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707, 714 (9th Cir.1992). We also review a denial of attorneys' fees under state law, Barrios v. Cal. Interscholastic Fed'n, 277 F.3d 1128, 1133 (9th Cir. 2002), as well a denial of costs under Rule 54(d)(1), Ass'n of Mexican-American Educators v. California, 231 F.3d 572, 592(9th Cir.2000) (en banc), for abuse of discretion. We review a district court's interpretation of Rule 68 de novo. Simon v. Intercont'l Transp. (ICT) B.V., 882 F.2d 1435, 1439(9th Cir.1989). To the extent the district court's Rule 68 analysis turns on disputed factual findings, we review for clear error. Id.

For the reasons that follow, we affirm the district court in all respects.

II. Discussion

A. Denial of Prejudgment Interest and Pre-Offer Costs and Attorneys' Fees to Champion

Champion appeals the district court's denial of its motion to amend the judgment to include prejudgment interest and pre-offer costs and attorneys' fees. Where a Rule 68 offer explicitly states that it is inclusive of prejudgment interest and pre-offer costs and attorneys' fees, the judgment to which the offer is compared must include these items if they are awarded. Only pre-offer costs and attorneys' fees are included for purposes of comparison, because post-offer costs and fees "merely offset part of the expense of continuing the litigation to trial, and should [therefore] not be included in the calculus." Marek v. Chesny, 473 U.S. 1, 7, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). See Tunison v. Cont'l Airlines Corp., 162 F.3d 1187, 1192 (D.C.Cir.1998) (explaining that where "the offer includes pre-offer costs, the amount of judgment used for comparison must include pre-offer costs as well, if they are to be awarded"); Marryshow v. Flynn, 986 F.2d 689, 692 (4th Cir.1993) ("It is neither logical or consistent with the rule and applicable authority to compare an offer of judgment which includes all costs, including attorneys' fees, and a judgment finally obtained which includes no costs.").

1. Denial of Prejudgment Interest to Champion

The district court properly looked to Idaho law to determine Champion's right to prejudgment interest. Mutuelles Unies, 957 F.2d at 714. Under Idaho Code § 28-22-104(1), a party is entitled to prejudgment interest on money due under an express contract only when the principal amount of liability is liquidated or ascertainable by a mere mathematical calculation. See Idaho Code § 28-22-104(1) ("When there is no express contract in writing fixing a different rate of interest, interest is allowed at the rate of twelve cents ... on the hundred by the year on: (1) Money due by express contract."); Bott v. Idaho State Bldg. Auth., 128 Idaho 580, 917 P.2d 737, 749(1996). Applying this standard, the district court denied prejudgment interest to Champion, explaining that "in light of the conflicting evidence presented by both parties concerning the contract prices and whether these prices had been modified or waived, the principal amount of liability under the parties' contract was not liquidated or ascertainable by mere mathematical processes prior to trial." The district court did not abuse its discretion in so holding.

In Farm Development Corp. v. Hernandez, 93 Idaho 918, 478 P.2d 298 (1970), the defendant had breached its contract to reimburse the plaintiff for half of the cost of applying fertilizer to a beet crop. The Idaho Supreme Court held that the plaintiff was not entitled to prejudgment interest under § 28-22-104:

In order for interest to be computed from the date of the contract, the amount upon which the interest is to be based must have been mathematically and definitely ascertainable. Farm Development has limited its claim for interest solely to that amount due for the fertilizer, contending that since the number of pounds of fertilizer per acre is set forth in the contract, the amount due is mathematically ascertainable. The evidence introduced by the parties was conflicting on the amount actually paid and the value thereof and the trial court believed that no exact price has been proven and further, that the price used for the award was obtained by merely striking a balance within the range of prices offered by the evidence. It cannot be said, therefore, that the amount was ascertainable `by mere mathematical processes.'

Id. at 300. See also Bouten Constr. Co. v. H.F. Magnuson Co., 133 Idaho 756, 992 P.2d 751, 762 (1999) ("In Farm Development Corp., this Court denied pre-judgment interest where the amount of liability was disputed by the parties. This court found that the price was set in the contract, but because there was conflicting evidence of the price actually paid and the actual value of the product, the amount was not `ascertainable by mere mathematical processes.'" (citation omitted)); cf. Dillon v. Montgomery, 138 Idaho 614, 67 P.3d 93, 96-97 (2003) (holding that the trial court did not abuse its discretion in awarding prejudgment interest, despite the fact that the amount of liability was disputed, where the contract explicitly set forth a procedure for easily determining the contract amount in the event of a dispute).

Champion argued at trial that it incurred roughly $330,000 in damages due to Ruby's breach. Ruby countered that to the extent a contract existed, the parties had modified and/or...