Fireman's Fund Insurance Companies, a California Corporation v. Centennial Bank, an Oregon Corporation, and Zirkle, Long & Trigueiro, Cpa's Carl Long
Docket: 93-35156
Court: Court of Appeals for the Ninth Circuit; October 7, 1994; Federal Appellate Court
Centennial Bank appeals a jury verdict in favor of Fireman's Fund Insurance Companies on claims of negligent misrepresentation and fraud. The Ninth Circuit affirms the judgment on the fraud claim and does not address the negligent misrepresentation claim. Centennial argues that Fireman's Fund had no right to rely on its representations; however, the court finds that this issue was not adequately raised during the district court proceedings. Although Centennial's counsel mentioned the right to rely, he ultimately did not argue it, and the court will not consider it on appeal.
In reviewing the sufficiency of the evidence, the court states that a verdict can only be reversed if the evidence supports only one reasonable conclusion in favor of the moving party. Centennial contests the jury's finding of intent to mislead, which requires that a defendant misrepresents a material fact knowingly or with reckless disregard. The court concludes there was sufficient evidence showing Centennial acted with the requisite intent to mislead, as it was aware of the conditions under which Hyland & Sons needed to secure performance bonds from Fireman's Fund. Centennial undermined the purpose of its loan to David Hyland by imposing conditions that conflicted with the necessary working capital requirements for bonding.
Centennial was aware that Fireman's Fund was depending on loan information from Hyland & Sons' accountant. In a response to a standard inquiry from Fireman's Fund, Centennial indicated "none" regarding any contingent liability for Hyland & Sons as a guarantor of another's debt. At a subsequent meeting with Fireman's Fund and the accountant, the accountant stated there could be no restrictions or guarantees concerning Dave Hyland's personal loan. Centennial's representatives, despite knowing this information, did not contradict or clarify, which a jury could interpret as a false confirmation that no restrictions were present on Hyland & Sons' assets or corporate guarantees. The available evidence supported the jury's conclusion regarding intent.
Centennial contested the district court's denial of its motions for "Judgment as a Matter of Law," arguing Fireman's Fund did not prove loss causation linking its misrepresentations to Fireman's Fund's losses. However, Fireman's Fund was required to show that these misrepresentations led to the issuance of completion bonds to Hyland & Sons and significantly contributed to its losses. Despite Centennial's claims that the guaranty did not cause any project defaults, substantial evidence indicated that Fireman's Fund would not have issued the bonds without Centennial's misrepresentations about the guaranty and the restricted certificate of deposit. This restriction hindered Hyland & Sons' ability to perform projects, directly contributing to Fireman's Fund's losses.
Centennial also argued for a reduction of the fraud judgment based on Oregon’s comparative fault statute. However, it did not raise this argument during the trial, instead filing a motion to amend the judgment post-trial, which the district court denied. The review of this denial is based on whether the district court abused its discretion, assessing if there was newly discovered evidence, clear error, or a change in law. Centennial's appeal primarily focused on alleged clear error or manifest injustice in the district court’s decision.
Under Oregon law, tort claims based on reckless conduct are subject to offsets for the plaintiff's comparative fault. Centennial contended that the jury could have found it guilty of fraud based on recklessness or intentional conduct, arguing that the verdict should be assumed to be based on recklessness. However, the court disagreed, noting that Centennial did not object to the jury instructions at trial, which prevents them from challenging it on appeal under Federal Rule of Civil Procedure 51. The court emphasized that failing to raise an argument during trial waives the right to contest it later, and a Rule 59(e) motion is not an appropriate means to address this. Furthermore, the court stated it cannot assume the jury found recklessness without undermining their fact-finding role. The conclusion affirmed that Centennial failed to preserve the issues regarding Fireman's Fund's reliance on its misrepresentations and any potential offsets due to comparative fault. The evidence supported a finding of fraudulent intent on Centennial's part, indicating it knowingly misled Fireman's Fund or acted with reckless disregard for the truth. Substantial evidence also linked Centennial's misrepresentations to Fireman's Fund's losses. The ruling was affirmed, with a note that it is not suitable for publication or citation except as permitted by Ninth Circuit Rule 36-3.
