David Teece v. Kuwait Finance House (Bahrain) , 667 F. App'x 931 ( 2016 )

FILED
NOT FOR PUBLICATION
AUG 03 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID JOHN TEECE, Nos. 14-16439
14-16536
Plaintiff - Appellant,
Cross - Appellee,
v. D.C. No. 3:13-cv-03603-WHA
KUWAIT FINANCE HOUSE
(BAHRAIN) B.S.C.; ABDULHAKEEM MEMORANDUM*
AL-KHAYYAT; ADNAN MALIK;
PAUL MERCER,
Defendants - Appellees,
Cross - Appellants.
Appeals from the United States District Court
for the Northern District of California
William Alsup, District Judge, Presiding
Argued and Submitted July 20, 2016
San Francisco, California
Before: GRABER, and TALLMAN, Circuit Judges, and RAKOFF,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Jed S. Rakoff, Senior United States District Judge for
the Southern District of New York, sitting by designation.
David John Teece appeals the district court’s order partially granting
attorney’s fees in his voluntarily dismissed diversity action against Kuwait Finance
House (Bahrain) B.S.C. and three of its foreign officers (collectively “Kuwait
Finance”). Kuwait Finance cross appeals, contending that the district court erred in
reducing the fee award by 50 percent. We have jurisdiction over the appeals under
28 U.S.C. § 1291, and we affirm the district court’s fee award.
1. The district court had jurisdiction over Kuwait Finance’s motion for
attorney’s fees. After Teece’s voluntary dismissal without prejudice under Federal
Rule of Civil Procedure 41(a)(1), the district court retained jurisdiction over all
collateral matters. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394-95 (1990).
An award of attorney’s fees is a collateral matter. Id. at 396. The rule is well
settled. See, e.g., White v. N.H. Dep’t of Emp’t Sec., 455 U.S. 445, 451 (1982);
Budinich v. Becton Dickinson & Co., 486 U.S. 196, 200 (1988); Int’l Ass’n of
Bridge, Structural, Ornamental, & Reinforcing Ironworkers’ Local Union 75 v.
Madison Indus., Inc., 733 F.2d 656, 658-59 (9th Cir. 1984).
2. The district court, sitting in diversity, did not abuse its discretion in
finding that Kuwait Finance was a “prevailing party” under California law. When
a contract does not define “prevailing party” or otherwise dictate the availability of
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attorney’s fees after a voluntary dismissal, “a court may base its attorney fees
decision on a pragmatic definition of the extent to which each party has realized its
litigation objectives, whether by judgment, settlement, or otherwise.” Santisas v.
Goodin, 951 P.2d 399, 414 (Cal. 1998). Here, the district court did just that.
Teece relies on several California cases to support his argument that
attorney’s fees are not available after a voluntary dismissal without prejudice. But
those cases involve claims under California Civil Code § 1717, which expressly
precludes attorney’s fees only when a case is voluntarily dismissed “in any action
on a contract.” See, e.g., Desmarais v. Drummond (In re Estate of Drummond), 56
Cal. Rptr. 3d 691, 696 (Ct. App. 2007). Because Teece’s claims sound in tort, the
claims are not “on a contract” and § 1717(b)(2)’s prohibition on attorney’s fees
does not apply. Santisas, 951 P.2d at 401, 409.
3. The district court did not err in ruling that the Murabaha Agreement
(“Agreement”) between the parties providing for attorney’s fees was broad enough
to encompass Teece’s tort claims. We agree with the district court that it is
“unreasonable” for Teece to argue that none of Kuwait Finance’s legal fees were
“in connection with, the enforcement of, or preservation of rights under” the
Agreement. But even if Kuwait Finance was not seeking to enforce or preserve
rights under the Agreement, Teece’s inclusion of the Agreement in his initial
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disclosures, and the reference in his complaint to the $3 million investment, would
trigger the provision of the Agreement permitting attorney’s fees for “legal
consultancy . . . in relation” to the Agreement.
4. The district court did not abuse its discretion in declining to extend
international comity and abstain from ruling on the motion for attorney’s fees. The
district court properly decided only the collateral matter before it, leaving the New
Zealand courts to determine the validity of Teece’s claims and, potentially, the
Agreement. Teece has not identified any conflict between the United States and
New Zealand or Bahraini law that could serve to justify abstention. Mujica v.
AirScan Inc., 771 F.3d 580, 600-03 (9th Cir. 2014), cert. denied, 136 S. Ct. 690
(2015). Nor has Teece shown that the other factors relevant to an international
comity analysis required the district court to invoke the international comity
doctrine. See id. at 603-08.
5. The district court found that half of the motion practice before it was
directed at vindicating Kuwait Finance’s rights under the Agreement and capped
Kuwait Finance’s award at 50 percent. This decision was neither clearly
erroneous, nor an abuse of discretion.
Finally, we reject Kuwait Finance’s contention that the attorney’s fees
incurred to preserve its rights under the Agreement were inexplicably intertwined
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with its defense to Teece’s lawsuit in general. The district court provided the
requisite “concise but clear” explanation to justify its decision to award 50 percent
of the attorney’s fees requested. See Hensley v. Eckerhart, 461 U.S. 424, 437
(1983).
Each party shall bear its own costs on appeal.
AFFIRMED.
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