Lacey Marketplace Assoc. II v. United Farmers of Alberta Coop ( 2017 )

FILED
NOT FOR PUBLICATION
DEC 21 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LACEY MARKETPLACE ASSOCIATES No. 15-35571
II LLC, a Washington limited liability
company and BURLINGTON RETAIL, D.C. No. 2:13-cv-00383-JLR
LLC, a Washington limited liability
company,
MEMORANDUM*
Plaintiffs-Appellees,
v.
UNITED FARMERS OF ALBERTA
COOPERATIVE LIMITED, a foreign
association,
Defendant-Appellant,
SPORTSMAN’S WAREHOUSE, INC.,
Defendant-Appellee.
LACEY MARKETPLACE ASSOCIATES No. 15-35658
II LLC, a Washington limited liability
company and BURLINGTON RETAIL, D.C. No. 2:13-cv-00383-JLR
LLC, a Washington limited liability
company,
Plaintiffs-Appellants,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
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v.
UNITED FARMERS OF ALBERTA
COOPERATIVE LIMITED, a foreign
association; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, District Judge, Presiding
Argued and Submitted December 5, 2017
Seattle, Washington
Before: O’SCANNLAIN, TALLMAN, and WATFORD, Circuit Judges.
1. United Farmers of Alberta Cooperative Limited (UFA) waived its right to
challenge the district court’s grant of summary judgment to Sportsman’s
Warehouse (Sportsman’s) on the tortious interference claim. Arguments that a
party failed to raise below are not necessarily waived when, as here, the district
court considered those same arguments below. See Tarabochia v. Adkins, 766 F.3d
1115, 1128 n.12 (9th Cir. 2014). But UFA did not just fail to oppose Sportsman’s
motion for summary judgment. Rather, it made the same arguments in its own
defense that Sportsman’s made in support of its summary judgment motion. UFA
even joined a different part of Sportsman’s motion. UFA cannot reverse course
now that it has admitted liability and argue directly against the position it took in
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the district court. See Castro v. Cty. of Los Angeles, 833 F.3d 1060, 1074 n.7 (9th
Cir. 2016). Thus, the grant of summary judgment to Sportsman’s on the tortious
interference claim is affirmed.
2. The district court erred in granting judgment as a matter of law to
Sportsman’s on the Uniform Fraudulent Transfer Act (UFTA) claim. The jury did
not specify whether it found the transfer at issue to be actually or constructively
fraudulent, or whether it found Sportsman’s liable as a third-party beneficiary of
the transfer between Wholesale and UFA. Because there was a valid legal basis for
finding actual fraud on Sportsman’s part, judgment as a matter of law was
inappropriate regardless of the validity of the legal basis for finding constructive
fraud or liability as a third-party beneficiary. See Fed. R. Civ. P. 50(a)(1); First
Nat’l Mortg. Co. v. Fed. Realty Inv. Tr., 631 F.3d 1058, 1067–69 (9th Cir. 2011).
There was sufficiently clear and satisfactory evidence of actual fraud for a
reasonable jury to conclude that Sportsman’s transacted with Wholesale with the
“actual intent to hinder, delay, or defraud” Lacey Marketplace Associates II and
Burlington Retail (the Landlords). Wash. Rev. Code § 19.40.041(1)(a); see
Clayton v. Wilson, 227 P.3d 278, 283 (Wash. 2010). Fraudulent intent can be
established when as few as seven of the eleven enumerated factors that suggest
fraudulent intent are present. See Wash. Rev. Code § 19.40.041(2)(a)–(k);
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Douglas v. Hill, 199 P.3d 493, 497 (Wash. Ct. App. 2009); see also Clayton, 227
P.3d at 283–84.
The district court held that only three factors were present. See Wash. Rev.
Code § 19.40.041(2)(e), (i), (j). But, viewing the evidence in the light most
favorable to the Landlords, a reasonable jury could conclude that at least four
additional factors were also present. See First Nat’l Mortg., 631 F.3d at 1067–68.
First, UFA and Wholesale were insiders, and Sportsman’s knew that the Master
Transaction Agreement (MTA) required that its payment to Wholesale would go to
UFA. See Wash. Rev. Code § 19.40.041(2)(a). Second, UFA and Sportsman’s
gave the Landlords late and vague notice of the MTA, which had the effect of
concealing the transfer for a time. See Wash. Rev. Code § 19.40.041(2)(c). Third,
litigation was pending by the time the MTA closed and Sportsman’s transacted
with Wholesale. See Wash. Rev. Code § 19.40.041(2)(d); Clayton, 227 P.3d at
284. Finally, Sportsman’s helped design the transaction so that Wholesale’s assets
would be removed from the Landlords’ reach. See Wash. Rev. Code
§ 19.40.041(2)(g).
This evidence was sufficient to support a finding of actual fraud, so we
reverse the district court’s grant of judgment as a matter of law on the UFTA claim
against Sportsman’s. Because no party challenged the district court’s conditional
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grant of a new trial to Sportsman’s on the UFTA claim, we leave that alternative
ruling undisturbed.
3. The district court correctly held that the Landlords’ damages for lost rent
and retenanting costs did not need to be offset by the rent the Landlords received
from the replacement tenants. Two principles of Washington law establish that no
such offset would have been appropriate here, whether or not the Landlords
terminated their leases with Wholesale. First, under Washington law, a “defaulting
tenant is not entitled to a credit for the excess rent the landlord receives from a
subsequent tenant toward the unpaid rent owed by the original tenant for the period
of time the property was vacant.” Hargis v. Mel-Mad Corp., 730 P.2d 76, 81
(Wash. Ct. App. 1986). Second, the landlord, and not the defaulting tenant, should
receive any benefit of the tenant’s breach. Id. In light of these principles, the
district court properly denied a “surplus rent” offset because the Landlords
received damages only for the period during which the properties sat vacant.
4. The district court correctly held that changes in the value of the
Landlords’ properties did not affect the damages owed to the Landlords. The
Washington Supreme Court’s statement that the measure of damages from a breach
of lease is “the difference in the value of the property independent of the lease”
must be viewed in light of the court’s application of that rule. See Family Med.
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Bldgs., Inc. v. Dep’t of Soc. & Health Servs., 702 P.2d 459, 464 (Wash. 1985). In
Family Medical Buildings, the court permitted the landlord to recover only the lost
rent and retenanting costs without any mention of the property value. Id.; see also
Peyton Bldg., LLC v. Niko’s Gourmet, Inc., 323 P.3d 629, 635 (Wash. Ct. App.
2014). In practice, Washington law does not require breach-of-lease damages to be
calculated with reference to property value. The district court’s denial of a
property value offset is affirmed.
5. The district court did not abuse its discretion in holding that the
Landlords were not entitled to prejudgment interest. Prejudgment interest is
available only if the tort or contract damages were (1) liquidated or (2)
unliquidated but “determinable by reference to a fixed contractual standard,
without reliance on opinion or discretion.” Forbes v. Am. Bldg. Maint. Co. West,
240 P.3d 790, 793 (Wash. 2010); see State Dep’t of Corr. v. Fluor Daniel, Inc.,
161 P.3d 372, 375 (Wash. 2007) (rule applies to tort and contract damages).
Damages that depend on a jury’s determination of “reasonableness” are not
liquidated, even if calculated from documented expenses. See Scoccolo Constr.,
Inc. v. City of Renton, 145 P.3d 371, 377 (Wash. 2006); Harris v. Drake, 65 P.3d
350, 365 (Wash. Ct. App. 2003). Here, as the jury instructions reflect, the damages
for the breach of contract, tortious interference, and UFTA claims all depended on
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an exercise of the jury’s discretion, which precludes an award of prejudgment
interest.
6. The Landlords’ request for judicial notice is DENIED. UFA’s motion to
strike is DENIED as moot.
AFFIRMED in part, REVERSED in part, and REMANDED.
The parties shall bear their own costs.