Ostrich International Company Ltd. v. Michael A. Edwards Group International, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 17, 2024
• Docket: 23-55529
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 17 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

OSTRICH INTERNATIONAL COMPANY No. 23-55529 LTD., a foreign corporation, D.C. No. Plaintiff-Appellee, 2:21-cv-00639-JVS-AS

v. MEMORANDUM* MICHAEL A. EDWARDS GROUP INTERNATIONAL, INC., DBA MAE Group International, Inc., a California corporation; MICHAEL A. EDWARDS, an individual,

Defendants-third-party- plaintiffs-Appellees,

v.

AETCO, INC.; DEEPMALA SENGUPTA, AKA Mala Taylor, an individual, a shareholder, officer and director of Aetco, Inc.,

Third-party-defendants- Appellants.

Appeal from the United States District Court for the Central District of California James V. Selna, District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Submitted May 15, 2024** Pasadena, California

Before: GOULD, N.R. SMITH, and MENDOZA, Circuit Judges.

AETCO, Inc. and Deepmala Sengupta (“appellants”) appeal the district

court’s order granting in part Ostrich International Company Ltd’s motion to

enforce a settlement agreement arising from Ostrich’s diversity action against

Michael A. Edwards Group International, Inc. We have jurisdiction under 28

U.S.C. § 1291, and we review the district court’s enforcement of a settlement

agreement for an abuse of discretion. Callie v. Near, 829 F.2d 888, 890 (9th Cir.

1987). “Reversal is appropriate only if the court based its decision on an error of

law or clearly erroneous findings of fact.” Maynard v. City of San Jose, 37 F.3d

1396, 1401 (9th Cir. 1994) (citation and internal quotation marks omitted). We

affirm.

“The construction and enforcement of settlement agreements are governed

by principles of local law which apply to interpretation of contracts generally.”

Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989). Under California law—

which applies to this case—a settlement agreement is a contract, and the legal

principles which apply to contracts generally apply to settlement contracts. See

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

2 Gorman v. Holte, 211 Cal. Rptr. 34, 37 (Cal. Ct. App. 1985) (collecting cases).

The district court did not abuse its discretion in allocating the risk of loss to

the appellants after a third-party hacker emailed “updated” instructions to

appellants that conflicted with the parties’ final written settlement agreement. See

Callie, 829 F.2d at 890. The district court reasonably held that the recipient of

fraudulent writing instructions bears the risk of loss because they can easily

confirm or verify the correct wire instructions. This finding is consistent with

California law which allows courts to allocate the risk of loss to the party best able

to avoid it when “it is reasonable in the circumstances to do so.” See Donovan v.

RRL Corp., 27 P.3d 702, 717 (Cal. 2001) (quoting the Restatement (Second) of

Contracts § 154(c)).

Appellants contend that the district court should have determined that

Ostrich’s attorneys were negligent in failing to maintain the confidentiality of the

settlement agreement from third parties. Appellants did not properly raise this

argument nor develop the factual record before the district court, and we generally

do “not ‘consider an issue not passed upon below.’” Foti v. City of Menlo Park,

146 F.3d 629, 638 (9th Cir. 1998) (quoting Golden Gate Hotel Ass’n v. City &

Cnty. of S.F., 18 F.3d 1482, 1487 (9th Cir. 1994)).

AFFIRMED.