Apex Abrasives v. Wgi Heavy Minerals

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 18, 2018
• Docket: 17-35057
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 18 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

APEX ABRASIVES, INC., No. 17-35057

Plaintiff-Appellant, D.C. No. 2:14-cv-00037-SEH-JTJ v.

WGI HEAVY MINERALS, INC.; WGI MEMORANDUM* HEAVY MINERALS, LLC; DOE BUSINESS ENTITIES 1-3,

Defendants-Appellees.

Appeal from the United States District Court for the District of Montana Sam E. Haddon, District Judge, Presiding

Argued and Submitted May 16, 2018 Seattle, Washington

Before: BERZON, THACKER,** and HURWITZ, Circuit Judges.

This case concerns a marketing and sales agreement (“Agreement”) between

Apex Abrasives, Inc. (“Apex”) and WGI Heavy Minerals, Inc. (“WGI”). Apex

appeals a judgment as a matter of law in favor of WGI entered in the midst of a jury

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Stephanie Dawn Thacker, United States Circuit Judge for the Fourth Circuit, sitting by designation. trial. We vacate in part and affirm in part.

1. “We review de novo the district court’s decision to grant judgment as a

matter of law, drawing all reasonable inferences in favor of [the nonmoving party].”

Peralta v. Dillard, 744 F.3d 1076, 1085 (9th Cir. 2014). In doing so, we hold that

the district court erred by interpreting the Agreement as unambiguously lacking a

minimum purchase term. To be sure, the Agreement is unambiguous -- but in the

other direction. The Agreement plainly mandates that Apex must “sell” and WGI

must “purchase” “a minimum of 5000 short Tons of Garnet in Year 1, and 10,000

short Tons per calendar year thereafter during the Term.” (§ 3.1). See Corp. Air v.

Edwards Jet Ctr., 190 P.3d 1111, 1120–21 (Mont. 2008) (explaining that in

Montana, “[t]he construction and interpretation of a contract is a question of law”

and “[w]here the language of a contract is unambiguous . . . the duty of the court is

to apply the language as written”). Sections 4.3 and 4.4 of the Agreement, on which

the district court relied, cannot and do not override the earlier provision. Rather,

they provide the procedures for implementing it.

2. The district court also erred by deciding as a matter of law that the

Agreement was modified by performance. Drawing all reasonable inferences in

favor of Apex, a reasonable jury could conclude that the Agreement was not

modified. Although WGI ordered less than the minimum purchase requirement,

Apex repeatedly voiced its dissatisfaction and specifically invoked the minimum

2 purchase term in writing soon after the first possible alleged breach, which was at

the end of the first year of the Agreement.

3. Accordingly, the district court erred in granting judgment as a matter of

law to WGI on Apex’s breach of contract claim. We vacate the judgment and

remand for further proceedings on that claim. And, because the district court’s ruling

on the remainder of Apex’s breach of implied covenant of good faith and fair

dealing, constructive fraud, and negligent misrepresentation claims was enmeshed

with its ruling on the breach of contract claim, we also vacate the judgment as a

matter of law on those claims, and remand to the district court for further

proceedings.

4. The parties voluntarily stipulated to dismissal with prejudice of Apex’s

tortious interference claim. See Fed. R. Civ. P. 41(a)(1)(A)(ii); see also Eitel v.

McCool, 782 F.2d 1470, 1473 (9th Cir. 1986) (holding that “an unqualified oral

stipulation of dismissal made in open court satisfies Rule 41(a)(1)(ii), even where

no formal stipulation was signed by the parties”). The district court’s March 25,

2016 order vacating its own “rulings” from the February 2016 pretrial conference

did not revive the claim.

5. In light of our ruling on the contract claims and remand for trial, we need

not address Apex’s evidentiary arguments on appeal. The challenged evidentiary

3 rulings were premised at least in part on the district court’s erroneous interpretation

of the Agreement and may be reconsidered by the district court on remand.

6. The district court did not err in denying Apex’s motion for sanctions; the

court reasonably concluded that that litigation was not reasonably foreseeable at the

time WGI’s records were destroyed. See Leon v. IDX Sys. Corp., 464 F.3d 951,

957–58 (9th Cir. 2006) (indicating that we review a district court’s spoliation

sanctions order for abuse of discretion but that we review its factual findings for

clear error).

7. We also conclude that the district court did not abuse its discretion over

discovery matters by conditioning Apex’s second deposition of a witness on the

payment of WGI’s reasonable attorneys’ fees. A district court’s “broad discretion

to manage discovery and to control the course of litigation under Federal Rule of

Civil Procedure 16,” Avila v. Willits Envtl. Remed. Tr., 633 F.3d 828, 833 (9th Cir.

2011), includes the power to condition a second deposition on the imposition of fees.

8. Finally, because we adduce no evidence of personal bias in the record on

the part of the district judge, we decline to order this case reassigned. But given the

history of this matter, the district court might well conclude that recusal and

reassignment on remand would serve the cause of justice. Each party shall bear their

own costs.

AFFIRMED IN PART, VACATED IN PART, and REMANDED.