Fenton v. Freedman
| Decision Date | 05 December 1984 |
| Docket Number | No. 84-5627,84-5627 |
| Parties | Shaindy FENTON and Shaindy Fenton, Inc., Plaintiff/Cross-Defendant-Appellee, v. Gary A. FREEDMAN, Richard Freedman and Judith Freedman, Defendants/Counter Claimants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Howard O. Boltz, Kadison, Pfaelzer, Woodard, Quinn & Rossi, Los Angeles, Cal., for plaintiff/cross-defendant-appellee.
Paul H. Samuels, Freedman, Tucker & Baum, Beverly Hills, Cal., for defendants/counter claimants-appellants.
Appeal from the United States District Court for the Central District of California.
Before FARRIS, ALARCON, and NORRIS, Circuit Judges.
Richard Freedman, Judith Freedman and Gary Freedman (hereinafter the Freedmans) appeal from the district court's judgment in favor of co-plaintiffs Shaindy Fenton and Shaindy Fenton, Inc. (hereinafter Fenton) and the denial of their counterclaims.
Shaindy Fenton filed a diversity action seeking payment for the purchase price of specific works of art she had contracted to purchase on behalf of each of the Freedmans. The Freedmans filed a counterclaim in which they alleged that Fenton acted as the Freedmans' agent and breached her fiduciary duty of full disclosure.
The Freedmans seek reversal on the following grounds:
One. The district court lacked subject matter jurisdiction over two of the claims.
Two. The district court erred in "substituting" Shaindy Fenton, Inc. in place of Shaindy Fenton, because Shaindy Fenton, Inc. lacked capacity to sue in California.
Three. The district court erred in considering the deposition testimony of Shaindy Fenton without first ruling on the parties' objections.
Four. The district court erred in determining that there was insufficient evidence to establish an agency relationship.
We discuss each issue and the facts pertinent thereto under separate headings.
Judith and Richard Freedman argue that the district court lacked subject matter jurisdiction because Fenton alleged claims against each of them in an amount of less than $10,000. The complaint alleged damages in the amount of $6,000 against Richard Freedman, $7,850 against Judith Freedman and $70,000 against Gary Freedman.
Each of the Freedmans' compulsory counterclaims exceeded $10,000. In Roberts Mining & Milling Co. v. Schrader, 95 F.2d 522 (9th Cir.1938), we stated that a counterclaim that exceeded the necessary amount in controversy was sufficient to bring the entire case within the jurisdiction of the district court, "regardless of the lack of jurisdictional averments in the bill of complaint." Id. at 524. But cf. Motorists Mutual Insurance Co. v. Simpson, 404 F.2d 511, 514-15 (7th Cir.), cert. denied, 394 U.S. 988, 89 S.Ct. 1470, 22 L.Ed.2d 763 (1968) () (dictum). The Freedmans did not object to the district court's exercise of jurisdiction prior to the filing of their compulsory counterclaim but, rather, raised the issue for the first time on appeal. Thus, under the law of this circuit, the district court had jurisdiction over each claim against the Freedmans. 1
The Freedmans contend that the district court erred in considering the deposition testimony of Shaindy Fenton without ruling on their objections.
In accordance with the Local Rules of Practice for the United States District Court, Central District, Rule 8.1.2 and 9.4.9, the parties identified the particular questions and answers proffered and those portions of the deposition to which they objected.
Upon admitting the deposition at trial, the district judge stated that he would rule on the objections raised and would "read those portions that have been marked by the plaintiff ... pursuant to the local rules." The Freedmans contend that "the district court did not rule formally or informally on the propriety of these objections ...." They request a remand to the district court so that a record can be made of the rulings on each of their objections.
We have reviewed the record. The district court did not rule on the Freedmans' objections. The Freedmans did not request a ruling on their objections prior to the entry of the judgments against them.
The failure of a litigant to request a ruling is a waiver of the right to raise any issue before this Court concerning admissibility. In 1962, we stated that "[i]t is ... elementary that before a party can successfully contend that certain testimony should not be considered by this Court [on review], it is necessary that the party not only object to the admission of said evidence, but also, seek a ruling on its objection." Dale Benz, Inc., Contractors v. American Casualty Co., etc., 305 F.2d 641, 643 (9th Cir.1962).
To permit a party to challenge the admissibility of evidence on appeal, after failing to direct the trial court's attention to its failure to rule, would give the appellant an unfair advantage. By remaining silent in the trial court, he denies his opponent the opportunity to lay a better foundation or to present other competent evidence. The trial court is also deprived of the opportunity to explain its ruling or to correct its error. Under such circumstances, the objecting party is free to gamble on a favorable judgment before the trial court, knowing that he can seek reversal on appeal because of his failure to obtain a ruling on his objections.
The Freedmans have waived their right to complain about the admission of the deposition testimony.
The Freedmans assert that the district court abused its discretion in substituting Shaindy Fenton, Inc. in place of Shaindy Fenton as plaintiff. The Freedmans sought a dismissal after the close of the plaintiffs' case on the grounds that Shaindy Fenton was not the real party in interest since the evidence showed all transactions sued upon were entered into between Shaindy Fenton, Inc. and the Freedmans. In response to this motion, the district court stated it would substitute Shaindy Fenton, Inc. in place of Shaindy Fenton. The Freedmans objected, stating that Shaindy Fenton, Inc. lacked capacity to sue in California and was therefore an improper plaintiff.
In addressing the merits of this argument, it is apparent that the parties have overlooked the fact that the district court specifically designated Shaindy Fenton, Inc. as a co-plaintiff in the pretrial conference order. 2 The Freedmans' subsequent The district court correctly joined Shaindy Fenton, Inc. in accordance with the Fed.R.Civ.P. 19(a) and 20(a). Rule 19(a) provides for the joinder of certain absent parties if "joinder will not deprive the court of jurisdiction." Here, both Shaindy Fenton and Shaindy Fenton, Inc. were citizens of the State of Texas. Since the Freedmans were citizens of California, complete diversity between the parties was preserved after the joinder. The court's action was also consistent with the requirements of Rule 20(a). Rule 20(a) provides that:
motion to dismiss on the ground that Shaindy Fenton, Inc. was not a party to this action is not supported by the record.
all persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or, in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any questions of law or fact common to all these persons will arise in the action.
The district court's conclusion that Shaindy Fenton and Shaindy Fenton, Inc. were effectively the same entity is supported by the evidence. The acts of Shaindy Fenton as the sole shareholder and executive officer of Shaindy Fenton, Inc. were so intertwined with the acts of the corporation that the claims could have been filed jointly. The same questions of law or fact were common to both plaintiffs in this suit.
Further, contrary to the Freedmans' contention, Shaindy Fenton, Inc. did not lack capacity to sue in California. Rule 17 of the Federal Rules of Civil Procedure provides that a corporation's capacity to sue "shall be determined by the law under which it was organized." Shaindy Fenton, Inc. was organized under the laws of Texas. California's laws concerning the right of a corporation to file an action have no bearing on the capacity of a Texas corporation to maintain a federal action.
The district court did not abuse its discretion in joining Shaindy Fenton, Inc. as a party to this action.
The Freedmans contend that "the undisputed facts establish an agency relationship as a matter of law and the district court erred in finding [that] there was no substantial evidence because of a lack of evidence on its 'terms.' "
The Freedmans misstate the trial court's findings. In fact, the district court stated: "I find [that] there is not a preponderance of the evidence of the terms of any agency between Shaindy Fenton or Shaindy Fenton, Inc. and the defendants."
In a nonjury civil case, a claimant must satisfy the district court that the truth of each element of his claim has been demonstrated by a preponderance of the evidence. In determining whether a party has met this burden, the district court alone determines the credibility of the witnesses, and the weight to be attached to their...
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