Zamani v. Carnes ( 2007 )


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  •                      FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    MICHAEL A. ZAMANI, an                      
    individual; NANCY MILLER-
    WALLACE, formerly Nancy
    Zamani, an individual,
    No. 04-17571
    Plaintiffs-Appellees,
    v.                               D.C. No.
    CV-03-00852-RMW
    H. GENE CARNES; PHILLIP CARNES;
    OPINION
    JENNIFER CARNES; KATHRYN
    SCHALLER; KEVIN SCHALLER,
    individuals,
    Defendants-Appellants.
    
    Appeal from the United States District Court
    for the Northern District of California
    Ronald M. Whyte, District Judge, Presiding
    Argued and Submitted
    January 10, 2007—San Francisco, California
    Filed June 4, 2007
    Before: Procter Hug, Jr. and William A. Fletcher,
    Circuit Judges, and H. Russel Holland*, District Judge.
    Opinion by Judge Holland
    *The Honorable H. Russel Holland, Senior United States District Judge
    for the District of Alaska, sitting by designation.
    6689
    ZAMANI v. CARNES                     6693
    COUNSEL
    James R. Hales, Rowe & Hales, Minden, Nevada, for the
    appellants.
    Michael A. Zamani, pro se, San Jose, California, argued on
    his own behalf. Timothy E. Herr, Herr & Zapala, San Jose,
    California, was on the brief for the appellees.
    OPINION
    HOLLAND, District Judge:
    Appellants H. Gene Carnes, Phillip Carnes, Jennifer Car-
    nes, Kathryn Schaller, and Kevin Schaller (“the Carneses”)
    appeal the district court’s denial of their motion to strike and/
    or dismiss and their motion for reconsideration. We have
    jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
    I.
    In January 2000, the Carneses, who were residents of
    Nevada, commenced a declaratory judgment action against
    appellees, California residents Michael A. Zamani and Nancy
    Miller-Wallace, who was then married to Mr. Zamani and
    known as Nancy Zamani (“the Zamanis”). The Carneses pre-
    vailed in that action and a judgment for attorney fees and
    costs was entered against the Zamanis, which the Carneses
    filed with the Santa Clara County Recorder’s Office. The
    Zamanis appealed but did not file a supersedeas bond,
    although there were some negotiations between the parties as
    to the proper amount of such a bond. While the declaratory
    6694                   ZAMANI v. CARNES
    judgment action was still on appeal, the Carneses began to
    execute on the assets of the Zamanis. In December 2002, the
    Zamanis requested that the Carneses provide them with the
    correct amount still owing on the judgment so that they could
    close a third-party escrow. The Carneses advised the Zamanis
    that they would provide a recordable satisfaction of judgment
    if the Zamanis paid $99,123, which the Carneses claimed to
    be the balance due on the judgment, and deposited $56,359 in
    the district court’s registry. This additional money was for
    attorney fees and costs in the event the Carneses prevailed on
    appeal. Later, the Carneses also requested that the Zamanis
    issue a general release of all claims as a condition of delivery
    of an acknowledgment of satisfaction of judgment. On Janu-
    ary 23, 2003, the Zamanis wired $91,613.38 to the Carneses’
    attorney and demanded that the Carneses provide an acknowl-
    edgment of satisfaction of judgment, according to the proce-
    dures set forth in California Code of Civil Procedure section
    724. On February 10, 2003, the Carneses filed a document
    with the district court titled “Full Satisfaction of Judgment.”
    This document provided:
    Payment in full . . . under the final judgment entered
    on March 5, 2001, is hereby acknowledged, and sat-
    isfaction full and complete and acquittance in full,
    including interest, is hereby given, except as to costs
    and expenses on appeal, and such additional sums, if
    any, including attorney’s fees on appeal, that may be
    awarded to [the Carneses].
    On February 26, 2003, the Zamanis filed suit against the
    Carneses. In their first two causes of action, the Zamanis
    alleged that the Carneses violated California Code of Civil
    Procedure sections 724.050 and 724.070 because the satisfac-
    tion of judgment that the Carneses filed did not comply with
    statutory requirements, and they had imposed unlawful condi-
    tions on delivery of the acknowledgment of satisfaction. In
    their third cause of action, the Zamanis alleged that they had
    overpaid the judgment by $1,832.19. The Zamanis sought
    ZAMANI v. CARNES                    6695
    general, economic, and exemplary damages in excess of
    $700,000.
    The Carneses moved to strike the Zamanis’ first two causes
    of action pursuant to California’s anti-SLAPP (“Strategic
    Lawsuit Against Public Participation”) statute, Cal. Civ. Proc.
    Code § 425.16, or in the alternative, to dismiss the first two
    causes of action pursuant to Federal Rule of Civil Procedure
    12(b)(6). The Carneses contended that the Zamanis’ first two
    causes of action should be stricken or dismissed because Fed-
    eral Rule of Civil Procedure 60(b)(5), not state law, applies to
    satisfaction of federal judgments. The Carneses further con-
    tended that even if state law applied, sections 724.050 and
    724.070 would not apply because those provisions only apply
    to judgments issued by state courts. The Carneses also moved
    to dismiss the third cause of action pursuant to Rule 12(b)(1)
    of the Federal Rules of Civil Procedure on the ground that if
    the first two causes of action were stricken or dismissed, the
    amount in controversy as to the third claim would be insuffi-
    cient to preserve diversity jurisdiction.
    The district court denied the Carneses’ motion to strike,
    concluding that California state law applies to satisfaction of
    judgments via Federal Rule of Civil Procedure 69(a). The dis-
    trict court rejected the Carneses’ argument that Rule 60(b)(5)
    applies instead. Because the district court denied the motion
    to strike, it concluded that the Carneses’ alternative Rule
    12(b)(6) motion also failed. The district court also denied the
    Carneses’ Rule 12(b)(1) motion because it denied the motion
    to strike and/or dismiss. In denying the Carneses’ motion to
    strike and/or dismiss, the district court did not address an
    additional argument the Carneses had raised in their reply
    brief: namely that the Zamanis’ claims were barred by the liti-
    gation privilege. The Carneses moved for reconsideration on
    this issue, but the district court denied the motion for recon-
    sideration because the Carneses failed to raise their litigation
    privilege argument in their opening brief. This appeal fol-
    lowed.
    6696                   ZAMANI v. CARNES
    II.
    “Although a district court’s denial of a motion under Fed-
    eral Rule of Civil Procedure 12(b)(6) is not ordinarily appeal-
    able,” Hydrick v. Hunter, 
    466 F.3d 676
    , 686 (9th Cir. 2006),
    the denial of an anti-SLAPP motion is immediately appeal-
    able pursuant to the collateral order doctrine. Batzel v. Smith,
    
    333 F.3d 1018
    , 1024 (9th Cir. 2003). The denial of a motion
    for reconsideration is immediately appealable if the underly-
    ing order is immediately appealable. See Branson v. City of
    Los Angeles, 
    912 F.2d 334
    , 336 (9th Cir. 1990). Because the
    district court’s order denying the motion to strike, or in the
    alternative, to dismiss, is immediately appealable, so is the
    district court’s order denying the motion for reconsideration.
    We review the district court’s denial of the anti-SLAPP
    motion and the motion to dismiss de novo. Vess v. Ciba-Geigy
    Corp. USA, 
    317 F.3d 1097
    , 1102 (9th Cir. 2003). We also
    review de novo the question of when state law applies to pro-
    ceedings in federal court. McCalla v. Royal MacCabees Life
    Ins. Co., 
    369 F.3d 1128
    , 1129 (9th Cir. 2004). Denial of a
    motion for reconsideration is reviewed for an abuse of discre-
    tion. Sissoko v. Rocha, 
    440 F.3d 1145
    , 1154 (9th Cir. 2006).
    III.
    [1] We consider first the district court’s denial of the anti-
    SLAPP motion. California’s “anti-SLAPP statute was enacted
    to allow early dismissal of meritless first amendment cases
    aimed at chilling expression through costly, time-consuming
    litigation.” Metabolife Int’l, Inc. v. Wornick, 
    264 F.3d 832
    ,
    839 (9th Cir. 2001). “A court considering a motion to strike
    under the anti-SLAPP statute must engage in a two-part inqui-
    ry.” 
    Vess, 317 F.3d at 1110
    . “First, a defendant ‘must make
    an initial prima facie showing that the plaintiff’s suit arises
    from an act in furtherance of the defendant’s rights of petition
    or free speech.’ ” 
    Id. (quoting Globetrotter
    Software, Inc. v.
    Elan Computer Group, Inc., 
    63 F. Supp. 2d 1127
    , 1129 (N.D.
    ZAMANI v. CARNES                      
    6697 Cal. 1999
    )). “Second, once the defendant has made a prima
    facie showing, ‘the burden shifts to the plaintiff to demon-
    strate a probability of prevailing on the challenged claims.’ ”
    
    Id. No one
    disputes that the Carneses have made their prima
    facie showing. The dispute here focuses on the second part of
    the test: whether the Zamanis have demonstrated a likelihood
    of success on their state statutory claims, which are based on
    sections 724.050 and 724.070 of the California Code of Civil
    Procedure. Section 724 is part of California’s Enforcement of
    Judgments Law (“EJL”). Section 724.050 provides that once
    a judgment has been satisfied, the judgment debtor may
    demand in writing that the judgment creditor “[f]ile an
    acknowledgment of satisfaction of judgment with the court,”
    and/or “[e]xecute, acknowledge, and deliver an acknowledg-
    ment of satisfaction of judgment to the person who made the
    demand.” If the judgment creditor fails to comply within 15
    days of the demand, he is liable “for all damages sustained by
    reason of such failure” and a statutory penalty of $100. Cal.
    Civ. Proc. Code § 724.050(c), (e). Section 724.060 sets forth
    specific requirements for the form and content of an acknowl-
    edgment of satisfaction of judgment. Section 724.070(a) pro-
    vides that if the judgment creditor imposes unlawful
    conditions on the delivery of an acknowledgment of satisfac-
    tion of judgment, “the judgment creditor is liable to the judg-
    ment debtor for all damages sustained by reason of such
    action or two hundred fifty dollars ($250), whichever is the
    greater amount.”
    [2] “ ‘[F]ederal courts sitting in diversity jurisdiction apply
    state substantive law and federal procedural law.’ ” Freund v.
    Nycomed Amersham, 
    347 F.3d 752
    , 761 (9th Cir. 2003) (quot-
    ing Gasperini v. Ctr. for Humanities, Inc. 
    518 U.S. 415
    , 427
    (1996)). The sections of the EJL at issue here, while providing
    procedures for an acknowledgment of satisfaction of judg-
    ment, also provide for money damages for failure to comply
    with the statutory procedures. Thus, they fall “ ‘within the
    6698                      ZAMANI v. CARNES
    uncertain area between substance and procedure’ ” because
    they are “ ‘rationally capable of classification as either.’ ”
    Kohlrautz v. Oilmen Participation Corp., 
    441 F.3d 827
    , 831
    (9th Cir. 2006) (quoting Hanna v. Plumer, 
    380 U.S. 460
    , 472
    (1965)). When faced with a state law that may be classified
    as either substantive or procedural, the court must determine
    whether “there is an applicable federal rule of civil proce-
    dure.” 
    Id. If there
    is an applicable federal rule, “and if that
    rule is valid under the Rules Enabling Act, 28 U.S.C. § 2072,
    that rule should be applied.” 
    Id. [3] The
    Carneses contend that Rule 60(b)(5) applies to the
    satisfaction of judgments and acknowledgment thereof. Rule
    60(b)(5) provides that relief “from a final judgment, order, or
    proceeding” may be had if “the judgment has been satisfied,
    released, or discharged . . . .” The Carneses insist that Rule
    60(b)(5), if read with Rule 83(b),1 covers all issues relating to
    the satisfaction of judgments and gives the district court com-
    plete discretion in such matters. We are not convinced that
    Rule 60(b)(5) can be construed that broadly, even if we were
    to rely on Rule 83(b) to fill the gaps.
    [4] The “satisfied, released, or discharged” clause of Rule
    60(b)(5) is generally invoked when a party seeks entry of sat-
    isfaction of judgment because no acknowledgment of satisfac-
    tion has been delivered due to an ongoing dispute over the
    judgment amount. See, e.g., Redfield v. Ins. Co. of N. Am.,
    
    940 F.2d 542
    , 544 (9th Cir. 1991); Conte v. Gen. Housewares
    Corp., 
    215 F.3d 628
    , 639-40 (6th Cir. 2000); Newhouse v.
    McCormick & Co., 
    157 F.3d 582
    , 584 (8th Cir. 1998); Baum-
    lin & Ernst, Ltd. v. Gemini, Ltd., 
    637 F.2d 238
    , 241 n.5 (4th
    Cir. 1980). Applying Rule 60(b)(5) in such situations com-
    ports with the plain language of the rule. Here, the Zamanis
    did not file suit in order to seek entry of satisfaction of judg-
    ment. The claim was not that the Carneses had failed to
    1
    Rule 83(b) of the Federal Rules of Civil Procedure allows a judge to
    regulate the practice in his court when there is no other controlling law.
    ZAMANI v. CARNES                      6699
    deliver an acknowledgment of satisfaction. Rather, the claim
    was that the Carneses had violated the Zamanis’ rights under
    California law by delivering a nonconforming acknowledg-
    ment of satisfaction. Rule 60(b)(5) does not apply to such a
    situation.
    [5] The district court concluded that the applicable federal
    rule was Rule 69(a), which provides, in pertinent part:
    The procedure on execution, in proceedings supple-
    mentary to and in aid of a judgment, and in proceed-
    ings on and in aid of execution shall be in
    accordance with the practice and procedure of the
    state in which the district court is held, existing at
    the time the remedy is sought, except that any statute
    of the United States governs to the extent that it is
    applicable.
    Fed. R. Civ. P. 69(a). We have not previously held that Rule
    69(a) applies to proceedings involving the acknowledgment
    of satisfaction of judgment. We have held that other provi-
    sions of the EJL apply, by virtue of Rule 69(a), to federal
    court judgments. See, e.g., Hilao v. Estate of Marcos, 
    95 F.3d 848
    , 853-54 (9th Cir. 1996) (holding that provisions of EJL
    applied to the notice of levy on a deposit account). Because
    Rule 69(a) applies to “proceedings supplementary to and in
    aid of a judgment,” the rule is broad enough to encompass a
    proceeding involving the acknowledgment of satisfaction of
    judgment. See Wolfe-Lillie v. Sonquist, 
    699 F.2d 864
    , 873 (7th
    Cir. 1983) (Rule 69(a) requires application of state law to sat-
    isfaction of judgment issue).
    [6] Thus, Rule 69(a) should be applied to the satisfaction
    of judgments and acknowledgment thereof as long as it is
    valid under the Rules Enabling Act. Rule 69(a) incorporates
    state law so it cannot possibly “abridge, enlarge or modify
    any substantive right” that may exist under section 724 of the
    California Code of Civil Procedure. 28 U.S.C. § 2072(b).
    6700                      ZAMANI v. CARNES
    Because Rule 69(a) is valid under the Rules Enabling Act, we
    conclude that it applies to satisfaction of judgments and
    acknowledgment thereof.
    [7] Rule 69(a) incorporates state law, thereby making the
    Zamanis’ first two causes of action cognizable claims. For the
    reasons set forth in the opinion in the related case, Carnes v.
    Zamani, Case No. 05-15084, which is filed concurrently with
    the filing of this opinion, we reject the Carneses’ argument
    that, by its own terms, section 724 cannot apply to this case
    because the EJL is limited to judgments of the State of Cali-
    fornia.
    [8] The foregoing establishes a legal foundation for the
    Zamanis’ first two causes of action. On the facts of this case,
    we agree with the district court that the Zamanis demonstrated
    a reasonable probability of success on the merits of their first
    two causes of action. The Carneses do not argue otherwise.
    The anti-SLAPP motion to strike was properly denied.
    IV.
    [9] As to the Rule 12(b)(6) motion to dismiss, the district
    court did not err in denying that motion, although the result
    on this motion does not necessarily follow from the anti-
    SLAPP motion, as the district court concluded. The relevant
    inquiry for a Rule 12(b)(6) motion is not whether the plaintiff
    has demonstrated a likelihood of success on the merits. A
    Rule 12(b)(6) “[d]ismissal is proper only where there is no
    cognizable legal theory or an absence of sufficient facts
    alleged to support a cognizable legal theory.” Navarro v.
    Block, 
    250 F.3d 729
    , 732 (9th Cir. 2001). Because the
    Zamanis’ first two causes of action are based on cognizable
    legal theories which are supported by sufficient facts, the Rule
    12(b)(6) motion was properly denied.2
    2
    Because the Zamanis’ first two causes of action remain viable, the
    amount in controversy is satisfied, and the district court properly denied
    the Rule 12(b)(1) motion.
    ZAMANI v. CARNES                      6701
    V.
    [10] Lastly, we consider the district court’s denial of the
    Carneses’ motion for reconsideration. Because the motion
    was filed within ten days of the district court’s order on the
    motion to strike and/or dismiss, we treat it as a Rule 59(e)
    motion. Circuit City Stores, Inc. v. Mantor, 
    417 F.3d 1060
    ,
    1064 (9th Cir. 2005). A Rule 59(e) motion is properly granted
    “ ‘if the district court (1) is presented with newly discovered
    evidence, (2) committed clear error or the initial decision was
    manifestly unjust, or (3) if there is an intervening change in
    controlling law.’ ” 
    Sissoko, 440 F.3d at 1153-54
    (quoting
    Dixon v. Wallowa County, 
    336 F.3d 1013
    , 1022 (9th Cir.
    2003)). The Carneses, in essence, argue that the district court
    abused its discretion in denying the motion for reconsidera-
    tion because it was clear error for the district court to not con-
    sider their litigation privilege argument. The district court did
    not commit clear error in failing to consider the litigation
    privilege argument because the Carneses did not raise this
    argument until their reply brief. The district court need not
    consider arguments raised for the first time in a reply brief.
    See Koerner v. Grigas, 
    328 F.3d 1039
    , 1048 (9th Cir. 2003).
    The district court thus did not abuse its discretion in denying
    the Carneses’ Rule 59(e) motion.
    VI.
    Based on the foregoing, the district court’s denial of the
    Carneses’ motion to strike and/or dismiss and the Carneses’
    motion for reconsideration is AFFIRMED.
    

Document Info

Docket Number: 04-17571

Judges: Hug, Fletcher, Holland

Filed Date: 6/4/2007

Precedential Status: Precedential

Modified Date: 3/1/2024

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