Ivanov v. Fitness Elite Training Center, Inc

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 5, 2024
• Docket: 24-2651
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 5 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

IVAN D. IVANOV, No. 23-3067 D.C. No. Plaintiff - Appellee, 1:20-cv-00380-CWD v. MEMORANDUM* FITNESS ELITE TRAINING CENTER, INC, an Idaho corporation; DAN MAUGER; BROOKE MAUGER,

Defendants - Appellants.

IVAN D. IVANOV, No. 24-2651 Plaintiff - Appellee, D.C. No. 1:20-cv-00380-CWD v.

FITNESS ELITE TRAINING CENTER, INC; DAN MAUGER; BROOKE MAUGER,

Appeal from the United States District Court for the District of Idaho Candy W. Dale, Magistrate Judge, Presiding

Argued and Submitted October 24, 2024

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Portland, Oregon

Before: LEE, VANDYKE, and H.A. THOMAS, Circuit Judges.

Fitness Elite Training Center, Inc. (“Fitness Elite”) appeals the district

court’s directed verdict, order of summary judgment, evidentiary rulings, award of

attorneys’ fees, and its judgment after trial. We have jurisdiction under 28 U.S.C. §

1291. We reverse the district court’s order on the liquidated damages and fringe

benefits issues, and accordingly vacate its award of attorneys’ fees. We affirm the

district court in all other respects. We remand for further proceedings.

1. We review de novo “a district court’s interpretation of state law.” PSM

Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d 812, 820 (9th Cir. 2018)

(citation and internal quotation marks omitted). Under Idaho law, a court’s

interpretation and the legal effect of unambiguous contractual language are

questions of law. Huber v. Lightforce USA, Inc., 367 P.3d 228, 238 (Idaho 2016).

Contrary to the district court’s conclusion, this matter is controlled by the Idaho

Supreme Court’s decision in Moore v. Omnicare, Inc., 118 P.3d 141 (Idaho 2005).

Unlike Huber, and as in Moore, Fitness Elite’s employment agreement with Ivanov

provided for “liquidated damages” if Fitness Elite terminated Ivanov without

cause. Moore, 118 P.3d at 145. And as with the contract at issue in Moore, the

liquidated damages provision here was based on the entire term of the contract,

decreasing with an increasing length of employment. See id. (payment for the

2 23-3067 remainder of the agreement); cf. Huber, 367 P.3d at 238 (set payment of twelve-

months’ salary). Ivanov’s contract, moreover, contained a reciprocal liquidated

damages provision requiring Ivanov to pay Fitness Elite if he left his employment

without cause. Such a provision further demonstrates that the contract provides for

liquidated damages, rather than for severance pay. Because we conclude that, as a

matter of law, the agreement here provided for liquidated damages, not wages, the

district court incorrectly trebled these damages under the Idaho Wage Claim Act.

And because the district court’s calculation of attorneys’ fees was based on the size

of this damages award, we vacate that award and remand for further proceedings.

2. The district court did not abuse its discretion in admitting evidence of

financial documents and audio recordings during the trial of this case. See

Wilkerson v. Wheeler, 772 F.3d 834, 838 (9th Cir. 2014). The information about

Dan and Brooke Mauger’s finances was relevant to whether there was a unity of

interest between the Maugers and Fitness Elite. Nor did the district court err when

it refused to give the jury a limiting instruction as to the financial documents, since

the documents were not admitted for a limited purpose. United States v.

McLennan, 563 F.2d 943, 948 (9th Cir. 1977). As to the audio recordings, the

district court properly determined that portions of the audio recordings were

opposing-party statements pursuant to Federal Rule of Evidence 801(d)(2)(A), and

that portions of the recordings were admissible under Federal Rule of Evidence

3 23-3067 403. The district court did not err in admitting the recordings in almost their

entirety, given that Fitness Elite requested it do so. Fed. R. Evid. 106.

3. The district court did not err in determining that Fitness Elite’s location

was an essential term of the contract, or in supplying that term. Under Idaho law,

“when parties to a contract have not agreed to a term essential to determine their

rights and duties, the court supplies a term reasonable in the circumstances.” Hull

v. Giesler, 331 P.3d 507, 520 (Idaho 2014) (citing Restatement (Second) of

Contracts § 204). Here, an anchoring location was essential to Ivanov’s

performance of the contract, which, among other things, required (1) meetings with

Fitness Elite following each wrestling season; (2) “prospect evaluation, recruiting,

training, [and] coaching”; (3) compliance with governing athletic rules; (4) and

personnel supervision. Cf. Midtown Ventures, LLC v. Capone, 539 P.3d 992, 1004

(Idaho 2023). And the district court did not err in determining that a reasonable

jury would not have a legally sufficient evidentiary basis to find that Fitness Elite’s

location was anywhere but Wendell given that: Fitness Elite’s only gym is

physically located in Wendell, Idaho; the only addresses it has used are in

Wendell; the testimony at trial that the intention was for Ivanov to be head coach at

the Wendell gym; and that Ivanov had moved to and lived in Wendell during his

time working for Fitness Elite.

4 23-3067 4. We reverse the district court’s judgment requiring Fitness Elite to pay

$456.52 in fringe benefits. Under Idaho law, the relevant test for determining

whether a liquidated damages provision is enforceable is whether actual damages

are “difficult or impossible to determine,” and whether liquidated damages “bear a

reasonable relationship to the actual damages anticipated to be incurred.” Margaret

H. Wayne Tr. v. Lipsky, 846 P.2d 904, 909–10 (Idaho 1993). Applying this test to

the contract between Fitness Elite and Ivanov, we conclude that the entirety of the

contract’s liquidated damages provision—including its accompanying exclusion-

of-remedies clause—is enforceable. This exclusion-of-remedies clause precludes

an award of fringe benefits to Ivanov.

5. The district court did not err in requiring Brooke Mauger to execute the

deed of trust. A spouse is estopped from invoking the protections of Idaho Code

§ 32-912 when they are “either ‘actually aware of the contract’ to convey the

property in question or ‘actually participated [in] and benefited from the contract

during its duration.’” Calvin v. Salmon River Sheep Ranch, 658 P.2d 972, 976

(Idaho 1983). “[C]onduct from which [the spouse’s] acquiescence [in the contract]

can be inferred may be sufficient to establish an estoppel.” Id. The evidence here

demonstrated that Brooke was aware of a prior version of the contract and of the

employment relationship between Ivanov and Fitness Elite. She also benefited

from the contract: her son received wrestling tutelage; she received assistance in

5 23-3067 running Fitness Elite’s affairs; and she derived personal benefits directly from

Ivanov.

REVERSED IN PART, AFFIRMED IN PART, VACATED IN PART,

AND REMANDED FOR FURTHER PROCEEDINGS. The parties shall bear

their own costs on appeal.

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