Federal Deposit Insurance v. Lugli

813 F.2d 1030
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 31, 1987
DocketNos. 86-1564, 86-1930
StatusPublished
Cited by1 cases

This text of 813 F.2d 1030 (Federal Deposit Insurance v. Lugli) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Deposit Insurance v. Lugli, 813 F.2d 1030 (9th Cir. 1987).

Opinion

DAVID R. THOMPSON, Circuit Judge:

The Federal Deposit Insurance Corporation (“FDIC”), as receiver for Penn Square Bank, brought this action against Russell V. Lugli and four closely-held corporations (collectively “Lugli”) to recover the unpaid balances of promissory notes. Following a jury trial, the district court entered judgment for the FDIC, and awarded it $2,174,-046.94 on the notes and $160,388.94 in attorney fees. The FDIC did not prevail, however, on its claim against Patrick Doyle, who signed one of the notes as custodian for Lugli’s minor children. At trial, Doyle established that this note had been replaced by one of Lugli’s notes. The district court did not award attorney fees to either party on the Doyle note. On appeal, Lugli contends the district court’s jury instructions on novation were erroneous, and that it erred in refusing to give novation instructions which he requested. Doyle contends the district court erred in denying his request for attorney fees. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

FACTS

Lugli borrowed money from Penn Square Bank to purchase partnership interests in oil and gas exploration ventures. Casey-Foss, Inc. acted as Lugli’s broker. Lugli later became dissatisfied with the investments. Casey-Foss agreed to buy the partnership interests from Lugli and replace Lugli as obligor on the Penn Square Bank promissory notes. It was agreed that Lugli would assign the partnership interests to Casey-Foss, and CaseyFoss would execute new notes in favor of the Bank. The Casey-Foss notes were to be secured by the partnership interests. The Bank agreed to this transaction.

Casey-Foss then signed and delivered new notes to the Bank. The Bank entered “O” as the balance due on the Lugli notes. It did not, however, mark the Lugli notes “paid”, nor did it return the notes to Lugli, as was its usual practice when a note obli[1032]*1032gation was discharged. Before the documents assigning the partnership interests from Lugli to Casey-Foss were prepared, the Bank was closed by order of the Controller of the Currency. Casey-Foss never signed the assignment documents. The Bank never received documents it required to collateralize the Casey-Foss notes. The FDIC, as receiver for the Bank, demanded that Lugli pay the balance due on the notes. Lugli refused, contending that his obligation had been discharged by novation, and that Casey-Foss, not Lugli, was indebted to the Bank. The FDIC then brought this action.

JURY INSTRUCTIONS

Lugli contends the district court’s jury instructions on novation were inadequate because they failed to provide the jury with information necessary for it to decide whether the parties had entered into a “novation agreement.” He also argues that the jury should have been given additional instructions on novation. He contends these additional instructions were necessary to enable the jury to “distinguish the issue of whether a novation agreement had been made from the issue of whether a novation agreement had been performed.” (Appellants’ Opening Brief at 15) (emphasis in original).

A. Standard of Review

We review the sufficiency of jury instructions to determine whether, viewed as a whole, they were misleading or inadequate. Lewy v. Southern Pacific Transportation Co., 799 F.2d 1281, 1287 (9th Cir.1986). We must consider whether the challenged instructions state the law incorrectly to the prejudice of the objecting party. Kisor v. Johns-Manville Corp., 783 F.2d 1337, 1340 (9th Cir.1986). The trial court is given substantial latitude in giving jury instructions. If the issues are fairly presented, the court has broad discretion regarding the precise wording of the instructions. Carvalho v. Raybestos-Manhattan, Inc., 794 F.2d 454, 455 (9th Cir.1986). “A court is not required to use the exact words proposed by a party, incorporate every proposition of law suggested by counsel or amplify an instruction if the instructions as given allowed the jury to determine intelligently the issues presented.” Roberts v. Spalding, 783 F.2d 867, 873 (9th Cir.) (quoting Los Angeles Memorial Coliseum Commission v. National Football League, 726 F.2d 1381, 1398 (9th Cir.), cert. denied 469 U.S. 990, 105 S.Ct. 397, 83 L.Ed.2d 331 (1984)), cert. denied, — U.S. -, 107 S.Ct. 399, 93 L.Ed.2d 352 (1986).

Refusal to give a requested instruction, when other instructions on the subject have been given, is reviewed for an abuse of discretion. See Taylor v. Burlington Northern Railroad Co., 787 F.2d 1309, 1314 (9th Cir.1986); see also United States v. Hayes, 794 F.2d 1348, 1351 (9th Cir.1986) (criminal case); Gauthier v. AMF, Inc., 788 F.2d 634, 635 (9th Cir.1986) (refusal to give proposed instructions an abuse of discretion). But cf. United States v. Scott, 789 F.2d 795, 797 (9th Cir.1986) (denial of requested instructions on criminal defenses reviewed de novo where availability of defenses is a question of law).

B. The Novation Instructions

The district court gave the following jury instructions on novation:

The primary issue in this case is the issue of novation. On this issue, the defendants have the burden of proof.
In this action, defendants have claimed that there was a novation of the agreements between Penn Square Bank and [Lugli], and that such defendants’ obligations to Penn Square Bank were assumed by Casey-Foss, Inc. The requisites of a novation are (1) previous valid obligations, (2) an agreement of all the parties to a new contract, (3) the extinguishment of the old obligation, and (4) the validity of the new one.
Those are the elements. Now, in order to sustain its burden of proof that there was a novation and that the defendants’ obligations on the promissory notes to Penn Square Bank were replaced by the obligation of Casey-Foss, Inc., the de[1033]*1033fendants must prove each and every one of these separate elements. In this case, the plaintiff stipulates that the previous obligations were valid. Accordingly, the defendants must show, by a preponderance of the evidence, that there was:
(1) an agreement between Penn Square Bank, defendant Lugli and Casey-Foss, Inc., that Casey-Foss, Inc. would assume each of the promissory notes executed by [Lugli];
(2) that the old obligation to Penn Square Bank was extinguished; and,
(3) that a valid obligation of CaseyFoss, Inc. was created.

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