Hambleton Bros. Lumber Co. v. Balkin Enterprises, Inc.

• Decision Date: 11 February 2005
• Docket Number: No. 03-35480.,03-35480.
• Citation: 397 F.3d 1217
• Parties: HAMBLETON BROTHERS LUMBER CO., a Washington corporation, Plaintiff-Appellant, v. BALKIN ENTERPRISES, INC., an Oregon corporation; Jim Ballinger, an individual; Kinsey; Financial Investments, Inc., an Oregon corporation; William Abraczinskas, an individual; Kerrylee Harrington-Adraczins, an individual; Marital Community of William and Kerrylee Abraczinskas, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

397 F.3d 1217

HAMBLETON BROTHERS LUMBER CO., a Washington corporation, Plaintiff-Appellant, v. BALKIN ENTERPRISES, INC., an Oregon corporation; Jim Ballinger, an individual; Kinsey; Financial Investments, Inc., an Oregon corporation; William Abraczinskas, an individual; Kerrylee Harrington-Adraczins, an individual; Marital Community of William and Kerrylee Abraczinskas, Defendants-Appellees.

No. 03-35480.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 15, 2004.

Filed February 11, 2005.

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Kurt M. Rylander, P.C., Vancouver, Washington, for the plaintiff-appellant.

Mark B. Comstock, Garrett, Hemann, Robertson, Jennings, Comstock & Trethewy, P.C., Salem, Oregon, for the defendant-appellee.

Appeal from the United States District Court for the District of Oregon, Garr M. King, District Judge, Presiding. D.C. No. CV-00-01765-GMK/DJH.

Before WALLACE, GOULD, and BERZON, Circuit Judges.

GOULD, Circuit Judge:

We must decide whether a Washington timber company's claims arising from the alleged breach of a timber contract were properly dismissed on summary judgment.

Hambleton Brothers Lumber Company appeals the district court's grant of summary judgment to Jim Ballinger on Hambleton Brothers's claims of breach of contract, piercing of the corporate veil, fraudulent concealment, unfair and deceptive trade practices under the Washington Consumer Protection Act, and shareholder distributions recoverable pursuant to Oregon Revised Statute section 60.645. Ballinger was formerly the president of Balkin Enterprises, an Oregon corporation that had entered into a contract with Hambleton Brothers in 1994 giving Hambleton Brothers the right to all merchantable timber on a particular parcel of land for a period of just over three years. Before Hambleton Brothers could log the property, it was sold by one William Abraczinskas, an unauthorized individual purporting to be Balkin's agent, and then logged by another company. Hambleton Brothers, gaining nothing for the funds it had paid for the logging rights, brought suit naming all parties involved both in the timber contract and in the property transfer, and the district court granted summary judgment as to defendant Ballinger on all claims. The court also granted Ballinger's motions to strike two documents offered by Hambleton Brothers. Accordingly, we must also decide whether either of those decisions was an abuse of the district court's discretion. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm in part, and reverse in part and remand.

I

Hambleton Brothers is a family-owned and operated Washington timber company founded in the 1950s. James Hambleton has thirty-years experience in the timber industry and has overseen the company's timber purchases since 1991. Balkin Enterprises was an Oregon corporation that engaged in real estate, timber, and racehorse transactions. Jim Ballinger and Dale Kinsey incorporated Balkin Enterprises in 1992, with each as a fifty-percent shareholder and Ballinger as Balkin's president.

On January 24, 1994, Hambleton Brothers and Balkin entered into a Timber Sales Agreement giving Hambleton Brothers the timber rights to a forty-acre plot in eastern Washington ("Fruitland property") until January 31, 1997, for $170,000. Before purchasing the timber rights and in lieu of hiring a "timber cruiser" to survey the land, Hambleton Brothers employed Chuck Adams to appraise the Fruitland timber by relying on a previously completed timber cruise.¹ Hambleton Brothers employed Adams to appraise land for timber value five to ten times between 1993-1995. Adams also worked for Balkin occasionally as a timber cruiser; Balkin paid him a finder's fee for his services. Adams introduced Kinsey and Ballinger to James Hambleton. Hambleton Brothers's decision to enter into the timber contract was based in part on Adams's appraisal of the timber value and in part on discussions with Dale Kinsey, but not on any discussion with Ballinger. Hambleton Brothers did not know at the time of the contract formation that Balkin Enterprises was also paying Adams a fee for his services.

In late 1994, Ballinger told Kinsey he wanted to end his participation in Balkin, and Ballinger returned to his former employment. Kinsey assumed control of all Balkin's assets, including its office equipment, horses, and title to the Fruitland property. However, neither man took steps formally to dissolve Balkin Enterprises. On July 25, 1995, Ballinger paid Kinsey $18,469 to cover half of Balkin's remaining expenses. Balkin Enterprises was administratively dissolved on September 21, 1995, for failing to renew its corporate status with the Office of the Secretary of State of Oregon.

On July 5, 1995, William Abraczinskas signed an unrecorded warranty deed transferring the Fruitland real estate from Balkin to Financial Investments, Inc. for ten dollars. Although Abraczinskas signed the deed purporting to be Balkin's vice president, he was not an employee, officer, or shareholder of Balkin. Ballinger and Kinsey knew Abraczinskas and had conducted business with him on a prior occasion, but neither authorized him to engage in any transaction on behalf of Balkin Enterprises. Financial Investments was Abraczinskas's own company. After several other rapid property transactions,² Cascade Pacific Land & Timber bought a timber deed to the Fruitland real estate and logged the property.

With no timber for its $170,000, Hambleton Brothers filed suit in the United States District Court for the District of Oregon on December 22, 2000, bringing claims for breach of the Timber Sales Agreement, interference with economic relations,³ fraud and concealment, unfair and unlawful trade practices under the Washington Consumer Protection Act (WCPA), piercing the corporate veil, and shareholder distributions recoverable pursuant to Or.Rev.Stat. § 60.645. Ballinger was named as a defendant, along with Balkin Enterprises, Kinsey, Mr. and Mrs. Abraczinskas, Financial Investments, and Trevor Coxen, the president of Financial Investments. On October 24, 2001, the district court granted Hambleton Brothers's motion for entry of default against Balkin and Financial Investments. On January 10, 2002, Ballinger individually moved for summary judgment on all claims.

On February 1, 2002, after the summary judgment motion was filed, Hambleton Brothers submitted corrections to the deposition of James Hambleton. The corrections expanded upon and rewrote portions of James Hambleton's deposition testimony, including for the first time new accusations implicating defendant Ballinger. On May 17, 2002, Hambleton Brothers submitted a declaration from Dale Kinsey. Ballinger moved to strike both documents.

In his Findings and Recommendations the magistrate judge recommended that Ballinger's motions to strike be granted, and that Ballinger be granted summary judgment on all claims. The district court adopted the proposed findings in their entirety and entered final judgment in favor of Ballinger pursuant to Federal Rule of Civil Procedure ("FRCP") 54(b). This appeal followed.

II

We first address the district court's order granting Ballinger's motions to strike the James Hambleton deposition corrections and the Dale Kinsey declaration, respectively.⁴

A

Federal Rule of Civil Procedure 30(e) states:

If requested by the deponent or a party before completion of the deposition, the deponent shall have 30 days after being notified by the officer that the transcript or recording is available in which to review the transcript or recording and, if there are changes in form or substance, to sign a statement reciting such changes and the reasons given by the deponent for making them. The officer shall indicate in the certificate prescribed by subdivision (f)(1) whether any review was requested and, if so, shall append any changes made by the deponent during the period allowed.

FRCP 30(e).⁵ James Hambleton's deposition corrections were signed and notarized on February 1, 2002. Hambleton Brothers argues that the corrections were timely under FRCP 30(e), because it did not actually receive the deposition transcript until January 7, 2002. This argument is unavailing. FRCP 30(e) states that the thirty-day correction clock begins upon notification of availability, not possession. Id. The court reporter's affidavit states that Hambleton Brothers was notified of the deposition transcript's availability for review at the latest on December 31, 2001. The corrections were thus properly due no later than January 30, 2002. See Blackthorne v. Posner, 883 F.Supp. 1443, 1454 n. 16 (D.Or.1995) (excluding untimely deposition corrections); Workman v. Chinchinian, 807 F.Supp. 634, 644-45 (E.D.Wash.1992) (same); see also Rios v. Bigler, 67 F.3d 1543, 1552-53 (10th Cir.1995) (excluding corrections in part because the record did not show the plaintiff's corrections were submitted within the "mandatory thirty day period").

Missing the thirty day deadline by a mere day or two might not alone justify excluding the corrections in every case. However, Hambleton Brothers compounded its mistake with other violations of FRCP 30(e). First, Hambleton Brothers omitted any statement in the deposition errata explaining the corrections, despite the fact that the plain language of the Rule requires that a statement giving reasons for the corrections be included. Hambleton Brothers offers no argument to explain its omission.

A statement of reasons explaining corrections is an important component of errata submitted pursuant to FRCP 30(e), because the statement permits an assessment concerning whether the alterations have a legitimate purpose. The magistrate judge was troubled by the deposition corrections' seemingly tactical timing — the corrections were submitted only after Ballinger's motion for summary judgment was filed — and by...