Unpublished Disposition, 933 F.2d 1016 (9th Cir. 1990)

MEMORANDUM^** 

Plaintiffs-Appellants appeal from two separate orders of the district court: a grant of summary judgment in favor of Defendant-Appellee Metropolitan Life, and an order finding that Metropolitan Life was entitled to attorney's fees. The appeals have been consolidated for our review. We have jurisdiction over the first appeal pursuant to 28 U.S.C. § 1291, and affirm. We lack jurisdiction over the second appeal and dismiss it.

Plaintiffs-Appellants The 3250 Wilshire Boulevard Building, a California limited partnership, and The 3250 Wilshire Boulevard Partners, a California limited partnership (collectively "Wilshire") began construction in 1969 on a 450,000 square foot high-rise commercial office building in Los Angeles, California. A material known as Monokote, which contains asbestos, was applied throughout the building as a fireproofing material.

After construction had been completed in 1971, Defendant-Appellee Metropolitan Life Insurance Company ("MetLife") purchased the property from and leased it back to Wilshire for twenty years with two twenty-year renewal options. Wilshire operated as manager of the building until 1985.

In 1986, Wilshire repurchased the building from MetLife. After the sale, Wilshire learned that MetLife had instituted a policy against making long-term loans on buildings containing asbestos materials, and was attempting to divest itself of any such properties.

Wilshire brought suit against MetLife, alleging breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and fraudulent concealment.¹  All claims were based on MetLife's failure to inform Wilshire before or at the time of the sale of the building that MetLife was divesting itself of all commercial property containing asbestos, due to the effect of asbestos-containing materials on the value and marketability of such property.

MetLife filed a motion for summary judgment on all claims. The district court granted MetLife's motion, and a final judgment was entered on February 2, 1990. Wilshire timely appealed from this judgment.

MetLife subsequently filed a motion for attorney's fees, costs and expenses based on the parties' Purchase and Sale Agreement, seeking in excess of $1.3 million. The district court filed an order finding that MetLife was entitled to fees and costs, and that Wilshire was entitled to present evidence of the reasonableness of the fees awarded. The order did not award fees in any amount to MetLife. Wilshire appealed from this order.

We first address the appropriateness of disposing of Wilshire's claims by summary judgment. Wilshire argues that it made a showing that genuine issues of material fact existed, precluding a grant of summary judgment in favor of MetLife.

The district court found that no evidence had been presented to show that a fiduciary or special relationship existed between MetLife and Wilshire. Rather, the court found that "the relationship the plaintiffs had with [MetLife] developed entirely from the normal, commercial interactions in conjunction with the lease of the building." Wilshire argues that the district court overstepped its bounds in making this finding, as the determination of the type of relationship the parties had was properly a question for a jury.

There is no error in the district court's finding that, based on the evidence before it, Wilshire and MetLife did not as a matter of law have a fiduciary relationship. Under California law, a fiduciary relationship is:

any relation existing between parties to a transaction wherein one of the parties is in [sic] duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he [or she] voluntarily accepts or assumes to accept the confidence, can take no advantage from his [or her] acts relating to the interest of the other party without the latter's knowledge or consent.

Herbert v. Lankershim, 9 Cal. 2d 409, 483 (1937), quoted in Barbara A. v. John G., 145 Cal. App. 3d 369, 382, 193 Cal. Rptr. 422, 431 (1983); see also Barrett v. Bank of Am., 183 Cal. App. 3d 1362, 1369, 229 Cal. Rptr. 16, 20 (1986).

We find no merit in Wilshire's argument that it relied on MetLife's advice and counsel, and thus that it is entitled to have the relation judged as fiduciary. Wilshire consists of two partnerships which, between them, planned, designed, built, sold, leased, operated and repurchased the building. Individual partners include experienced real estate developers, and the architectural firm which designed and occupied a portion of the building, and had specified the installation of the asbestos-containing material. Wilshire was not a party dependent on the advice and counsel of MetLife in the operation or sale of the building.

Barrett v. Bank of America, 183 Cal. App. 3d 1362, 229 Cal. Rptr. 16 (1986), in which the California appellate court held that a fiduciary relationship exists between a bank and its depositor/lendees, does not provide support for Wilshire's position. The fiduciary relationship in Barrett was based on the fact that the loan customer "perceived his relationship with [the bank's loan officer] as very close and ... relied on [his] advice implicitly," "shared confidential financial information" regarding the electronics industry in which the customer was involved, and relied on the loan officer's advice regarding a merger of the company. Id. at 1369, 229 Cal. Rptr. at 20-21 (emphasis added). In contrast, although Wilshire claims to have relied on MetLife for financial advice, it is inconceivable that a large partnership composed of real estate developers and architects who installed the asbestos-containing material would rely on its lessor for information regarding the presence and effect of asbestos-containing material in a commercial building in the same way that the small business owned by a husband and wife relied on the lendor bank's advice in Barrett.

Further, in Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 261 Cal. Rptr. 735 (1989), a different district of the California appellate court rejected the rule of Barrett and held that a fiduciary duty does not exist between a bank and its depositors or loan customers. Id. at 476, 261 Cal. Rptr. at 740. Under the rule of Price, Wilshire is required to show that something other than its lendor/lendee relationship with MetLife gave rise to the alleged fiduciary relationship to succeed on its claims.

In this case, Wilshire argues that a fiduciary and confidential relationship developed because, during the course of Wilshire's lease from MetLife, Wilshire depended on MetLife's business and financial advice as to the operation and management of the building. The district court order granting summary judgment cites nine specific facets of the business relationship between MetLife and Wilshire, as well as the fact that MetLife employees sometimes referred, in correspondence, to the management of the building as a joint venture, as Wilshire's showing that a fiduciary relationship existed between the parties. The district court found that, based on this showing, "There is nothing in the record that indicates that Met had become the fiduciary of or had developed a special relationship with the plaintiffs." The district court did not err in finding that Wilshire could not as a matter of law show that a fiduciary relationship with MetLife existed.

Wilshire's apparent argument that a joint venture or partnership may have arisen between the parties, and that the determination of such a relationship should have been considered by a jury, is similarly unavailing. There was no evidence before the district court, or before us on appeal, that the parties had any type of agreement, whether written, oral, or implied, for the sharing of profits and losses or for the right to control and manage the venture jointly. See Weiner v. Fleischman, 223 Cal. App. 3d 342, ----, 272 Cal. Rptr. 840, 845, rev. granted, 274 Cal. Rptr. 848 (1990); People v. Park, 87 Cal. App. 3d 550, 564, 151 Cal. Rptr. 146, 153 (1978).

The district court also correctly determined that Wilshire could not, as a matter of law, make out a claim for breach of the implied covenant of good faith and fair dealing. The following characteristics are required for a party to state a claim for a tortious breach of the implied covenant: (1) the parties are in inherently unequal bargaining positions; (2) the motivation for entering the contract was nonprofit; (3) ordinary contract damages would be inadequate because the party in the superior position would not be required to account for its actions, or because the inferior party would not be made whole; (4) one party was especially vulnerable and placed its trust in the other party of necessity; and (5) the other party was aware of the vulnerability. Wallis v. Superior Court, 160 Cal. App. 3d 1109, 1118, 207 Cal. Rptr. 123, 129 (1984).

The California Supreme Court has cautioned us against extending the reach of the tort remedy for breach of the implied covenant. "We must, therefore, consider with great care claims that extension of the exceptional approach taken [in cases of bad faith breach of an insurance contract] is automatically appropriate if certain hallmarks and similarities can be adduced in another contract setting." Foley v. Interactive Data Corp., 47 Cal. 3d 654, 690, 765 P.2d 373, 394, 254 Cal. Rptr. 211, 232 (1988) (holding that the tort remedy for breach of the implied covenant of good faith and fair dealing is not available for breach of an employment contract); see also Price, 213 Cal. App. 3d at 478, 261 Cal. Rptr. at 741 ("the implications of the court's analysis [in Foley ] presage a close scrutiny of tort recovery, for breach of the implied covenant of good faith and fair dealing outside of the insurance context ... [t]he decision surely precludes ... loose extension of tort recovery based on 'quasi-fiduciary' relationship").

Our analysis supra of Wilshire's claim for breach of fiduciary duty also applies to the claim for breach of the implied covenant. There was no evidence before the district court that Wilshire and MetLife were in unequal bargaining positions during the period of negotiations for the sale, or at any other time. We decline to extend the tort remedy for breach of the implied covenant of good faith and fair dealing to the alleged breach of a contract for the sale of a commercial building.

Finally, the district court did not err in determining that Wilshire could not, as a matter of law, make out a claim for fraudulent concealment. Wilshire's claim alleged that MetLife concealed material facts about the property of which MetLife had exclusive knowledge: the effect of the presence of asbestos-containing material (which Wilshire originally installed) on the value and marketability of Wilshire's commercial building.

The district court correctly noted that California courts have never applied the fraudulent concealment doctrine "to the concealment of a party's economic strategy and motives for the sale of property or its appraisal of general market conditions as opposed to specific, unique knowledge of a defect in the property." A claim for fraudulent concealment can be sustained when the information allegedly concealed directly concerns facts that are unique to the property. See, e.g., Mariposa County v. Yosemite West Assoc., 202 Cal. App. 3d 791, 813, 248 Cal. Rptr. 778, 791 (1988) (concealment of fact that water and sewage service could be discontinued to condominiums actionable); Reed v. King, 145 Cal. App. 3d 261, 267, 193 Cal. Rptr. 130. 133 (1983) (concealment of fact that gruesome multiple murder occurred in house not proper for decision on demurrer); Barnhouse v. City of Pinole, 133 Cal. App. 3d 171, 189-91, 183 Cal. Rptr. 881, 891-93 (1982) (preexisting seeps, slides and springs affecting value of property actionable); Lingsch v. Savage, 213 Cal. App. 2d 729, 29 Cal. Rptr. 201, 206 (1963) (allegation that building in "state of disrepair" and had been "placed for condemnation" not actionable). Wilshire directs us to no case or factual setting that would justify an expansion of the claim for concealment of a property defect to the facts presented here. The district court's order accurately identifies the policy problem with such an expansive reading of the rule: "If any factor possibly affecting a property's potential future value, including the general motivation of the seller and the seller's general appraisal of future market conditions must be disclosed, it would be impossible to carry out commercial transactions."

The district court did not err in granting MetLife's motion for summary judgment, as Wilshire could not as a matter of law make out a claim on any theory based on the facts presented to the district court. We affirm the district court's decision granting summary judgment in favor of MetLife.

Wilshire also appeals the order granting attorney's fees to MetLife, but reserving a final decision as to the amount thereof. Without a determination of the amount to which MetLife is entitled, the order granting attorney's fees is not a final, appealable order under 28 U.S.C. § 1291. "An order awarding attorney's fees which does not fully dispose of the issue of attorney's fees is not a final appealable order." Jensen Electric Co. v. Moore, Caldwell, Rowland & Dodd, Inc., 873 F.2d 1327, 1329 (9th Cir. 1989). Because the order is not final, we lack jurisdiction to consider it, and the appeal must be dismissed.

The fact that the parties stipulated to an extension of time to allow the two appeals to be briefed together does not affect our decision; the parties to an action cannot by stipulation grant subject matter jurisdiction to this court. See Clapp v. C.I.R., 875 F.2d 1396, 1398 (9th Cir. 1989); First Nat'l Bank of Chicago v. United States, 792 F.2d 954, 955 (9th Cir. 1986), cert. denied 479 U.S. 1064 (1987); Janakes v. United States Postal Serv., 768 F.2d 1091, 1095 (9th Cir. 1985).

MetLife has made a request for attorney's fees on appeal. As the prevailing party, MetLife is entitled to its fees, pursuant to the terms of the Purchase and Sale Agreement.

The decision of the district court in case No. 90-55323 is

AFFIRMED.

The appeal in case No. 90-55608 is

DISMISSED.