Sentinel Offender Services LLC v. G4s Secure Solutions, Inc. ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 12 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SENTINEL OFFENDER SERVICES, LLC, No. 17-55559
a Delaware limited liability company,
D.C. No.
Plaintiff-Appellant, 8:14-cv-00298-JLS-JPR
v.
MEMORANDUM*
G4S SECURE SOLUTIONS, INC., A
Florida corporation,
Defendant-Appellee.
SENTINEL OFFENDER SERVICES, LLC, No. 17-55785
a Delaware limited liability company, 17-55987
Plaintiff-Appellee, D.C. No.
8:14-cv-00298-JLS-JPR
v.
G4S SECURE SOLUTIONS, INC., A
Florida corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Josephine L. Staton, District Judge, Presiding
Argued and Submitted May 17, 2019
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Pasadena, California
Before: NGUYEN and OWENS, Circuit Judges, and BAYLSON,** District Judge.
In this appeal and cross-appeal, both parties challenge the district court’s
ruling and award of damages and attorneys’ fees following a bench trial. Appellant
and Cross-Appellee Sentinel Offender Services, LLC, (“Sentinel”) appeals the
district court’s damages award as insufficient. Appellee and Cross-Appellant G4S
Secure Solutions (USA), Inc., (“G4S”) appeals the district court’s decision on
liability in favor of Sentinel and its award of attorneys’ fees to Sentinel.
Sentinel sued G4S for breach of contract, fraud, and negligent
misrepresentation based on alleged statements and omissions related to Sentinel’s
acquisition of G4S’s subsidiary, G4S Justice Services, LLC (“Justice”).
Specifically, Sentinel alleged that G4S misrepresented that Justice had a “good
probability” of winning a pending bid for a contract, and deliberately withheld that
Justice’s bid did not comply with mandatory technical specifications. Sentinel sued
G4S when, following Sentinel’s acquisition of Justice, it did not obtain the
contract.
After a bench trial, the district court found G4S liable for fraud and
negligent misrepresentation but not breach of contract. The district court awarded
**
The Honorable Michael M. Baylson, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
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Sentinel $456,328 in compensatory damages and awarded Sentinel attorneys’ fees
as the prevailing party.
The district court had subject-matter jurisdiction under 18 U.S.C. § 1332.
This Court has jurisdiction under 28 U.S.C. § 1291.
We have considered the following issues and affirm.
1. G4S argues that the district court erred when it concluded that G4S
was liable for fraud and negligent misrepresentation. G4S contends that its “good
probability” statement was not a misrepresentation, or, alternatively, that the
misrepresentation was not actionable because it was merely an opinion. Sentinel
responds that the factual record supports the district court’s conclusion.
We review the district court’s findings of fact for clear error. Freeman v.
Allstate Life Ins. Co., 253 F.3d 533, 536 (9th Cir. 2001). After careful review of
the record, and in light of the standard of review, we reject G4S’s argument. The
district court found that G4S’s misrepresentation was actionable based on its
credibility assessment of the witnesses at trial. We cannot say that the district court
committed clear error in its credibility findings. These credibility assessments,
along with the sufficient evidence in the record cited by the district court, support
our conclusion that the district court did not clearly err in holding G4S liable to
Sentinel for fraud and negligent misrepresentation.
2. Sentinel argues that the district court’s award of damages was
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insufficient and erroneous. It first contends that the district court employed the
incorrect standard of damages as a matter of law when it applied California Civil
Code section 3333, requiring modification of the judgement or, alternatively, a
new trial limited to damages. Sentinel argues that the district court should have
instead applied California Civil Code section 3343, the standard of damages for
fraud by a non-fiduciary. Additionally, Sentinel contends that the district court
erred in its calculation of damages. Sentinel argues that the district court’s award
should have included the mezzanine financing it obtained to cover the purchase
price.
G4S responds that the district court applied the standard of damages
proposed by Sentinel, and thus that Sentinel should be judicially estopped from
raising an argument on this issue. Moreover, G4S contends that any error in
calculating damages was harmless because the standard applied by the district
court, section 3333, is broader than section 3343, the standard Sentinel now argues
should have been applied. Finally, G4S asserts that the district court’s calculation
of damages was not clearly erroneous.
Initially, we conclude that any error in the district court’s choice to evaluate
damages under section 3333 was invited by Sentinel. Sentinel’s Proposed Findings
of Fact and Conclusions of Law proposed that the district court apply section 3333
in awarding damages for fraud. United States v. Reyes-Alvarado, 963 F.2d 1184,
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1187 (9th Cir. 1992), as amended (June 15, 1992) (“The doctrine of invited error
prevents a [party] from complaining of an error that was his own fault.”). We also
agree that any error in the district court’s application of section 3333 was harmless
because that section uses a “broader” measure of damages than section 3343.
Alliance Mortgage Co. v. Rothwell, 44 Cal. Rptr. 2d 352, 361 (1995).
We review the district court’s computation of damages under the clearly
erroneous standard. Sutton v. Earles, 26 F.3d 903, 918 (9th Cir. 1999).
We do not find clear error in the district court’s calculation of damages. The
district court properly concluded that, notwithstanding G4S’s fraud, Sentinel was
not entitled to the entire amount of the lost contract. Rather, the district court
reasonably fashioned a measure of damages based upon the value Sentinel had
agreed to assign to other pending bids, as proposed by G4S’s expert witness. Under
this calculation, the district court awarded Sentinel a portion of the amount
Sentinel paid to acquire Justice, not only which accounted for the fact that there
had been a misrepresentation and an omission, but also for the fact that Sentinel
knew that there was no guarantee that Justice would win the pending contract. This
was a proper out-of-pocket damages calculation, as required under California law.
Moreover, it was within the district court’s discretion to decline to award
damages for the interest paid by Sentinel for mezzanine financing. The district
court properly considered this element of proposed damages, and was not required
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by California law to award it. We affirm the district court’s award of damages.
3. Finally, G4S asserts that the district court erred in imposing attorneys’
fees in favor of Sentinel. G4S contends that, because it was successful on the
contract claim, it should have been awarded attorneys’ fees as the prevailing party
on the contract under California Civil Code section 1717. Sentinel responds that
the district court properly found that it was the prevailing party under California
Code of Civil Procedure section 1032. Both parties appear to agree that the
“litigation objectives” test is the proper method for designating a prevailing party.
We review the district court’s award of attorneys’ fees for abuse of
discretion. Armstrong v. Davis, 318 F.3d 965, 970 (9th Cir. 2003).
The district court carefully considered California law on the issue of
attorneys’ fees and discussed both section 1717 and section 1032 at length. It then
appropriately concluded that Sentinel achieved more of its “litigation objectives”
than G4S because it obtained a “net monetary recovery.” The district court did not
abuse its discretion in awarding attorneys’ fees to Sentinel. Accordingly, we affirm
the district court’s award of attorneys’ fees.
AFFIRMED.
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