Madsen v. Jacoby

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 19, 2025
• Docket: 24-2983
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 19 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

JOHN MADSEN; STEPHAN LAKE No. 24-2983 ADVENTURES, LLC; STEPHAN LAKE D.C. No. HOLDINGS, LLC, 3:21-cv-00123-JMK Plaintiffs - Appellees, MEMORANDUM* v.

RUSSELL LEE JACOBY; LAURA MAE JACOBY; KAYLEE LAMAE JACOBY; JACOB LEE JACOBY; SHAWN DAMIEN MORRISON; DANA MICHELLE MORRISON,

Defendants - Appellants.

Appeal from the United States District Court for the District of Alaska Joshua M. Kindred, District Judge, Presiding

Submitted August 15, 2025** Anchorage, Alaska

Before: GRABER, OWENS, and R. NELSON, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Defendants Russell Lee Jacoby and Laura Mae Jacoby appeal the district

court’s denial of their motion for a judgment as a matter of law and their motion

for a new trial under the theory that the jury’s verdict was not legally permissible:

the jury could not have found both (a) that Defendants did not breach the sale

contract and (b) that Defendants did breach the covenant of good faith and fair

dealing. “We review de novo a denial of a Rule 50(b) renewed motion for

judgment as a matter of law.” Bell v. Williams, 108 F.4th 809, 818 (9th Cir.

2024). We review for abuse of discretion a denial of a Rule 59(a) motion for a

new trial. Janes v. Wal-Mart Stores Inc., 279 F.3d 883, 886 (9th Cir. 2002). We

have jurisdiction under 28 U.S.C. § 1291 and affirm.

Insofar as Defendants now disagree with the special verdict form, they

waived that objection by agreeing to the form, without objection, at trial. See Yeti

by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1109 (9th Cir. 2001)

(holding that a party waives objections to the verdict form when it fails to raise

them prior to the jury rendering its verdict). And, in any case, we read the special

verdict form as asking the jury (a) whether Defendants breached a written term of

the sale contract and, separately, (b) whether Defendants breached the implied

covenant of good faith and fair dealing implied in every contract under Alaska law.

See Lockwood v. Geico Gen. Ins., 323 P.3d 691, 697 (Alaska 2014) (holding that

the covenant of good faith and fair dealing is implied in every contract under

2 24-2983 Alaska law). Defendants could have undermined the sale contract as a whole

without also violating a specific written provision. Defendants fail to point to any

authority under Alaska law holding that the jury’s findings were not legally

permissible.

Nor does the jury’s verdict amount to an improper compromise verdict. The

jury’s award of $1.00 to Defendants is not inconsistent with Plaintiffs John

Madsen’s, Stephan Lake Adventures, LLC’s, and Stephan Lake Holdings, LLC’s

liability. See Kode v. Carlson, 596 F.3d 608, 611 (9th Cir. 2010) (per curiam)

(noting that a verdict is inconsistent when it finds liability but awards zero

damages (citing Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1030–36 (9th

Cir. 2003))). An award of $1.00 is consistent with the jury’s finding that Plaintiffs

were liable but that Defendants failed to prove damages. See White v. Ford Motor

Co., 312 F.3d 998, 1005 (9th Cir. 2002) (noting that the Seventh Amendment

imposes a duty on courts to uphold a jury verdict “unless it is impossible to

harmonize the answers under a fair reading” (quoting L.A. Nut House v. Holiday

Hardware Corp., 825 F.3d 1351, 1354 (9th Cir. 1987))). It is also consistent for the

jury to find that Defendants breached the covenant of good faith and fair dealing

and that Plaintiffs negligently misrepresented certain facts.

Defendants next argue that the jury’s finding that Plaintiffs negligently

misrepresented facts required them to find that the entire contract was void. But

3 24-2983 Defendant agreed to jury instructions that did not require such a finding. Under

those instructions, the jury had to find that the contract was void only if the jury

found that Plaintiffs made knowingly false misrepresentations intended to mislead.

But, under the same instructions, those are elements of intentional

misrepresentation only, but not elements of negligent misrepresentation.

Defendants also challenge the fee and cost award. Generally, we review fee

awards for abuse of discretion, but we review de novo any underlying questions of

law. Haworth v. Nevada, 56 F.3d 1048, 1051 (9th Cir. 1995). The district court

did not err. More than fourteen days before the start of trial, Plaintiffs made an

offer of judgment of $125,000 to settle all claims, in compliance with Federal Rule

of Civil Procedure 68. Defendants rejected the offer and received a far less

favorable award—$1.00—from the jury. The district court awarded Plaintiffs

costs under Rule 68 of the Federal Rules of Civil Procedure, and attorneys fees

under Rule 54 of the Federal Rules of Civil Procedure and Rule 68 of the Alaska

Rules of Civil Procedure. Plaintiffs’ offer of judgment satisfied both the state and

federal rules. Rule 54 of the Federal Rules of Civil Procedure allows district courts

sitting in diversity to award attorneys fees when state law provides for such an

award. Cheffins v. Stewart, 825 F.3d 588, 597 (9th Cir. 2016); Fed. R. Civ. P.

54(d)(2). Accordingly, the district court did not err in granting attorneys fees

under Rule 54. See Alaska R. Civ. P. 68 (allowing reasonable attorneys fees to an

4 24-2983 offeror when the offeree rejects the offer and receives a judgment at least five

percent less favorable than the rejected offer).

AFFIRMED.

5 24-2983