Unpublished Disposition, 874 F.2d 816 (9th Cir. 1982)

MEMORANDUM^* 

Hispamoto, S.A. (Hispamoto) appeals the district court's grant of summary judgment in favor of Kawasaki Motors Corp., U.S.A., (KMC) in Hispamoto's fraud, breach of contract, and unjust enrichment action against KMC arising out of an alleged exclusive distribution agreement for KMC products in Spain. We affirm on all counts.

FACTS

KMC first began shipping motorcycles into Spain to various companies owned by Verne B. Heiderich in 1976-77. As distributor, Heiderich then sold the motorcycles to various dealers in Spain. In late 1977 the Spanish Customs Authorities seized 700 Kawasaki motorcycles from Heiderich, claiming that because of the Japanese parts used to assemble the motorcycles, KMC had failed to comply with certain import restrictions regarding the importation of Japanese vehicles into Spain. Heiderich tried unsuccessfully to have the motorcycles released, and he became acquainted with Fidel Basterra and Antonio San Jose Calderon who indicated they might provide some assistance with his problem.

In November 1980, KMC's president, Seiji Yamada, and his assistant, Robert Moffit, met with Heiderich in Spain. The main purpose of this trip was to ascertain Heiderich's plans for paying the balance due on the 700 seized motorcycles. During this visit, a dinner meeting was arranged. KMC executives, Heiderich, Basterra and San Jose were in attendance. It was at this meeting that Hispamoto contends KMC agreed to grant an exclusive right to Hispamoto to import Kawasaki motorcycles in return for help in solving the problem with the 700 motorcycles.¹ 

In December 1980, Hispamoto, S.A., was formed for the purpose of importing and selling KMC's motorcycles in Spain, an event confirmed by Heiderich via telex to Moffit. Although Heiderich was not an owner of the new company, he acted as a liaison between Hispamoto and KMC.

Heiderich visited Moffit in California in February 1981 where the distribution agreement was discussed. Moffit sent the finalized Distributor Sales Agreement along with a Certificate of Representation to Heiderich at Hispamoto's address in Spain two months later.

In February 1984, Heiderich informed KMC that he had severed his ties with Hispamoto, and that San Jose was now 100% owner of the company. KMC subsequently notified Hispamoto that it was not prepared to enter into an extended distribution agreement with them in part due to the departure of Heiderich.

PROCEEDINGS BELOW

The district court held that Heiderich was an agent of Hispamoto; the Distributor Sales Agreement, which expired by its own terms on June 30, 1982, was a valid contract; the Certificate of Representation was not a legally enforceable contract; KMC did not act fraudulently; California law applies; and it granted summary judgment in favor of KMC.

DISCUSSION

We review grants of summary judgment de novo. California Architectural Bldg. Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987), cert. denied, 108 S. Ct. 698 (1988). We must look to the record of the proceedings below to determine whether "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Id. at 1468 (citing Fed. R. Civ. P. 56(c)). The non-moving party, however, must produce evidence which reasonably supports each element of its claims. Further, if the non-moving party's claims are implausible, "... that party must come forward with more persuasive evidence that would otherwise be necessary to show there is a genuine issue for trial." Id. at 1468.

In this diversity action, the substantive law of the forum state applies. Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). As a preliminary matter, we do not consider Hispamoto's argument raised for the first time in its reply brief that Spanish law should control the determination of whether the Certificate of Representation is a contract. Even assuming we were to consider this argument, Spanish law would not control. Fed. R. Civ. P. 44.1 requires that " [a] party who intends to raise an issue concerning the law of a foreign country shall give notice in his pleadings or other reasonable written notice." Hispamoto never plead or otherwise gave written notice to Kawasaki that he intended to argue the applicability of Spanish law. Accordingly, the law of the forum applies.

The district court found the Distributor Sales Agreement to be a valid contract enforceable against Hispamoto because it was signed by Heiderich, an agent of Hispamoto, "with full authority, actual, apparent, and ostensible, to contract on behalf of Hispamoto." Hispamoto argues the grant of summary judgment was improper because the validity of the Distributor Sales Agreement should have been determined as a contested factual issue by a jury rather than by the court.

The establishment of "authority" is ordinarily a question of fact. Bell v. Exxon Co., U.S.A., 575 F.2d 714, 715 (9th Cir. 1978). An agency can be either actual or ostensible. Cal.Civ.Code Sec. 2298. An actual agency exists when the agent is really employed by the principal, while ostensible agency exists when the principal either intentionally or by want of ordinary care, causes a third person to believe another--who is not really employed by him--to be his agent. Cal.Civ.Code Secs. 2299 and 2300. Where the evidence is susceptible of only one inference, i.e., the existence of agency, however, no triable issue of fact is presented. DeSuza v. Andersack, 63 Cal. App. 3d 694, 700, 133 Cal. Rptr. 920, 925 (1976). Under this circumstance, summary judgment is appropriate. KMC contends the uncontroverted facts support a finding that Heiderich was authorized to act on behalf of Hispamoto and that therefore the grant of summary judgment was appropriate. The facts support this contention.

For a period of four years, KMC conducted all business with Hispamoto through Heiderich. Heiderich was responsible for all communications with KMC on Hispamoto's behalf, and he was routinely delegated various responsibilities with respect to Hispamoto's business relationship with KMC. At no time in this period did anyone from Hispamoto indicate to KMC that Heiderich was not an agent or not authorized to act on behalf of Hispamoto. Moreover, Heiderich obtained the disputed Certificate of Representation from KMC pursuant to Hispamoto's directions. Heiderich declared that he held himself out to others as an agent of Hispamoto with full authority to contract on its behalf.

We further find that there were no circumstances even to place KMC on inquiry notice that Heiderich was acting only as an agent. Heiderich held himself out to KMC as a principal owner of Hispamoto with the full knowledge of the other principals. Thus KMC could not have been reasonably expected to inquire into the nature of the agent's authority. See Myers v. Stephens, 233 Cal. App. 2d 104, 115, 43 Cal. Rptr. 420, 429 (1965).

These facts and circumstances--taken as a whole--support a finding of agency. Thus, Heiderich had authority to sign the Distribution Sales Agreement. See U.S. Credit Bureau, Inc. v. Cheney, 235 Cal. App. 2d 357, 361, 45 Cal. Rptr. 525, 527 (1965). The Distribution Sales Agreement was therefore a binding contract until it expired.

Even assuming Hispamoto did not authorize Heiderich to contract in behalf of the corporation, if the corporation took and held the benefit of such contract, then it is estopped from denying the authority of Heiderich. Ellet v. Los Altos Country Club Properties, Inc., 88 Cal. App. 740, 745, 264 P. 270 (1928). Based upon Heiderich's responsibilities and Hispamoto's acceptance of his actions, we find that Heiderich was acting with authority, or at the least, that Hispamoto cannot deny his authority.

Further proof of authority is that Heiderich obtained the Certificate of Representation from KMC pursuant to Hispamoto's directions. The evidence that this act was approved by Hispamoto is sufficient to establish that Heiderich had authority to similarly act when he signed the Distributor Sales Agreement. See U.S. Credit Bureau v. Cheney, 235 Cal. App. 2d at 361, 45 Cal. Rptr. at 527.

KMC argues Hispamoto is trying to seek the benefit of the Certificate of Representation while repudiating the validity of the Distributor Sales Agreement. According to KMC, this amounts to Hispamoto affirming the agency as to the Certificate, but denying the agency as to the Agreement. Under California law, if Hispamoto has through its conduct "clothed" Heiderich with ostensible authority, it cannot deny or affirm the agency at its convenience. Hovley v. Frank Meline Co., 83 Cal. App. 441, 443, 257 P. 112, 113 (1927).

To refute this argument, Hispamoto refers to the deposition testimony of Yamada and Moffit. Yamada stated he did not have any idea as to what Heiderich's position was, and Moffit stated he did not know whether Heiderich was the sole owner, or whether other partners were involved. Hispamoto further argues the district court unfairly relied upon declarations of Heiderich and Moffit that were submitted in KMC's reply papers in support of its summary judgment motion, because it had no opportunity to respond to the reply papers. We are not persuaded by this argument.

We find that the facts clearly support only one inference--Heiderich was at the very least an agent of Hispamoto with ostensible authority to contract on its behalf. KMC dealt almost exclusively with Heiderich²  and at no time did Hispamoto deny that Heiderich was acting as its agent. Through want of ordinary care, Hispamoto allowed KMC to believe Heiderich possessed authority to act on its behalf.

B. Implied-in-Fact Contract Between KMC and Hispamoto

Hispamoto contends that the district court's holding that the Certificate of Representation is not an enforceable contract was wrong. Rather, the issue should have been submitted to a jury since there was evidence that an implied contract had been created.

Under California law, an implied-in-fact contract is one whose existence and terms are manifested by the conduct of the parties. Chandler v. Roach, 156 Cal. App. 2d 435, 319 P.2d 776 (1957). Hispamoto submits its claim of breach of contract rests in large part upon the promises and representations made by Yamada and Moffit at the November 1980 restaurant meeting, as well as its subsequent actions in reliance upon the Certificate.

Hispamoto argues the breach of contract claim is supported by J.C. Millet Co. v. Park & Tilford Distillers, Inc., 123 F. Supp. 484 (N.D. Cal. 1954) where a liquor distributor brought an action against a distiller for breach of an oral distribution agreement that was indefinite as to time. The court in Millet found that a distributor contract existed based upon several factors. The court noted most distributors in the area did business without written contracts regarding the duration or termination of their distributorships; plaintiff promised to use its best efforts to promote the sale of defendant's products; both parties understood the relationship was to continue; and plaintiff spent a lot of money and time in getting the distributorship going. The court found one year to be a reasonable period of time before termination could be effected, and that based upon its average inventory and period for depletion of the inventory, three months' notice of termination of the distributorship is sufficient. Id. at 493.

Millet is distinguishable from the instant case. In Millet, there was no dispute that an oral agreement had been reached--the dispute was over whether the agreement was sufficiently certain as to be a legally binding contract and, if so, what the terms regarding the duration of, and right to terminate, the distributorship were. In the present case, however, there was a dispute as to whether an oral agreement creating an exclusive dealership was consummated notwithstanding the contrary implications of the rest of the evidence.

We find that Hispamoto submits no evidence to support its theory that there was a mutual intent to enter into an implied-in-fact contract. After examining the correspondence between the parties, we believe that Hispamoto was merely anxious to get the Certificate of Representation in order to meet the Spanish customs regulations so that it could obtain Kawasaki motorcycles to exhibit at shows. No triable issues of fact were presented. Accordingly, we affirm the district court on this issue.

Hispamoto next contends that if the trial had occurred, Hispamoto would have been able to present sufficient evidence for a jury to decide the allegations of fraud in its favor. Although summary judgment is generally inappropriate in fraud cases where intent is an issue, summary judgment is appropriate where "all the reasonable inferences that could be drawn from the evidence defeat plaintiff's claim." Vaughn v. Teledyne, Inc., 628 F.2d 1214, 1220 (9th Cir. 1980). To defeat the motion for summary judgment, Hispamoto needed to produce evidence which reasonably supported each element of a fraud cause of action. Id. at 1220.

Under California law, the elements of fraud are: (1) a fraudulent misrepresentation; (2) knowledge by defendant of its falsity; (3) intent to deceive plaintiff; (4) reliance upon the representations by the plaintiff, believing them to be true; and (5) resulting injuries suffered by plaintiff. Paul Revere Life Ins. Co. v. Bass, 523 F. Supp. 134, 135 (N.D. Cal. 1981). The absence of any single element is fatal to establishing a cause of action. Pearson v. Norton, 230 Cal. App. 2d 1, 7-8, 40 Cal. Rptr. 634, 638 (1964). Further, "if the non-moving party will bear the burden of proof at trial as to an element essential to its case, and that party fails to make a showing sufficient to establish a genuine dispute of fact with respect to the existence of that element," summary judgment is appropriate. Franciscan Ceramics, 818 F.2d at 1468 (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)).

Hispamoto argues that the jury should have been permitted to determine whether the statements and representations made by KMC executives to San Jose and Basterra--that in return for their assistance in resolving the problem with the 700 motorcycles, they would receive the exclusive right to import KMC motorcycles into Spain--were fraudulent.

The evidence Hispamoto cites to support its contention is summarized as follows. First, KMC had prepared two drafts of the Certificate of Representation. In one which was not used, KMC states that Hispamoto will be granted an exclusive representative right--in full accordance with KMC's Distributor Sales Agreement and terms thereof. The version that was actually used, however, made no reference to the Distributor Sales Agreement. Second, Heiderich sent a telex in which he advised Basterra that he received the Certificate, but made no reference to the Distributor Sales Agreement. Third, Heiderich met with Moffit in California on or near the date when the two drafts of the Certificate were prepared. Next, KMC and Heiderich both hoped that Basterra and San Jose would be able to help them resolve the problem with the impounded motorcycles. And last, when the limited language of the 1979 Certificate of Representation, which clearly stated that Heiderich was given the exclusive right for the year of 1979, is compared with the broad language of the 1981 Certificate, the comparison supports Hispamoto's claim that KMC deceived and defrauded them. Based on this evidence, Hispamoto submits the inference that the Distributor Sales Agreement was intentionally concealed from it is reasonably supported; and this issue, therefore should have been reserved for a jury.

KMC argues that it is impossible to claim the Certificate was a false promise intended to induce Hispamoto's reliance and that KMC concealed the existence of the Distributor Sales Agreement. KMC's argument finds support in the express language of the Certificate which states that Hispamoto would be granted an exclusive distributorship. This at best is conditional language that speaks about the future, not the present. Moreover, the inference that KMC fraudulently concealed the Distributor Sales Agreement is not supported by the evidence since KMC sent both the Certificate and the Agreement in the same envelope to Heiderich at Hispamoto's address. Thus, Heiderich, who was acting within the scope of his authority in accepting the documents, knew of the existence of the Distributor Sales Agreement. This knowledge is imputed to Hispamoto. See Merchant's Holding Corp., Ltd. v. Grey, 6 Cal. App. 2d 682, 687, 45 P.2d 253, 255 (1935). Where an agent is put on notice of facts, that notice will be imputed to the agent's principal and is binding on the principal. Clark Equip. Co. v. Wheat, 92 Cal. App. 3d 503, 521, 154 Cal. Rptr. 874, 883 (1979). Since Heiderich was the only one with whom KMC ever communicated, the evidence clearly establishes that Heiderich had the authority to accept physical delivery of documents to Hispamoto. Heiderich accepted the documents while acting within the scope of his authority. The knowledge obtained from them, therefore, becomes the knowledge of Hispamoto. Thus, Hispamoto, should have known that two documents existed, regardless of whether Heiderich had the authority to sign the Agreement.

Hispamoto next argues that KMC made false promises to San Jose at a meeting in California in February of 1984. This allegation is not supported by the evidence. After this meeting in which KMC allegedly promised Hispamoto an exclusive distributorship, Hispamoto sent KMC several telexes asking for KMC's decision regarding its request for an exclusive distributorship. This suggests that there were no statements made on which Hispamoto could rely--and thus no fraud. Conclusory allegations which are unsupported by the actual data do not create a viable issue of fact precluding summary judgment. California ex rel Dep't of Transportation v. United States ex rel Dep't of Transportation, Federal Highway Administration, 561 F.2d 731, 733 n. 4 (9th Cir. 1977). Accordingly, we find that the district court did not err in granting summary judgment on the fraud claim.

CONCLUSION

We find that the evidence is susceptible of only one inference--that Heiderich acted with authority. The evidence supports the conclusion that he was authorized to sign documents, and his knowledge of the terms of the Distributor Sales Agreement is imputed to Hispamoto. As such, its express terms apply. Second, we find that the Certificate of Representation is not an implied-in-fact contract. As to the remaining issue, Hispamoto produces insufficient evidence to support its fraud claim. Accordingly, the grant of summary judgment is affirmed.

AFFIRMED.