Unpublished Disposition, 852 F.2d 571 (9th Cir. 1988)

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US Court of Appeals for the Ninth Circuit - 852 F.2d 571 (9th Cir. 1988)

Charlotte J. KELLY, and Kevin G. Kelly, Plaintiffs-Appellants,v.SIDEMCO, Sinclair De Martinis and Company, Joseph Demarinis,James E. Sinclair, James Halperin, New EnglandRare Coin Galleries (J.I. Corporation),Defendants- Appellees.

No. 87-3623.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 4, 1988.Decided July 1, 1988.

Before EUGENE A. WRIGHT, ALARCON, and POOLE, Circuit Judges.


Plaintiffs-appellants Charlotte and Kevin Kelly appeal from the order of the district court granting the summary judgment motions of defendants-appellees New England Rare Coin Galleries and James Halperin (collectively, New England), and Sinclair de Martinis & Co., Sidemco, James E. Sinclair and M. Joseph de Martinis (collectively, de Martinis). This is a diversity action in which the substantive laws of New York and Washington are applicable.

We affirm in part and reverse in part.

In 1978, 1979 and 1980, the Kellys purchased rare coins from coin dealers New England and de Martinis. In 1982, the Kellys became convinced that New England and de Martinis had misrepresented the value of those coins. The Kellys believed that some of the coins had been "overgraded," i.e., represented to be in better condition than they actually were, and that others were counterfeit.

The coins the Kellys purchased from New England were guaranteed as to grading and authenticity. The guarantee obligated New England to repurchase the coins at the same grade at which New England had sold them. Further, if any coins were found to be counterfeit, New England was obligated to refund the full purchase price plus interest.

Despite the guarantee, the Kellys did not demand that New England repurchase the allegedly overgraded coins or refund their money on the allegedly counterfeit ones. Instead, in November of 1983, the Kellys accepted an offer from de Martinis to purchase their entire portfolio of coins, including the coins purchased from New England, for a lump sum. De Martinis additionally requested that the Kellys execute an agreement releasing it "from all ... causes of action ... whatsoever, in law ... or equity ... to the date of" the agreement. The Kellys executed the release and accepted payment.

In October 1985, the Kellys filed this action against de Martinis and New England claiming that they fraudulently induced them into purchasing the coins. De Martinis moved for summary judgment alleging that the action against them was barred by the release. New England also moved for summary judgment claiming that any damages the Kellys sustained from the alleged fraud on New England's part resulted from the Kellys' failure to invoke the grading and authenticity guarantee.

The Kellys responded to de Martinis' motion with the contention that de Martinis coerced them into signing the release. Kevin Kelly claimed that de Martinis had possession of the coins and would not have given them back if he had refused to sign. He acknowledged, however, that de Martinis never threatened to withhold the coins, and that he never asked for their return. In response to New England's motion, the Kellys contended that New England would not have honored the guarantee because the ownership of New England changed subsequent to their purchase of the coins. The Kellys conceded that they never asked New England's new owners to honor the guarantee, notwithstanding the fact that the new owners had agreed to assume the previous owner's obligations.

The district court granted both summary judgment motions. The district court held that the Kellys' "conclusionary allegation of coercion" was insufficient to raise a triable issue of fact as to the validity of the release.

In granting New England's motion, the district court concluded that the Kellys' damages, if any, resulted from their decision to "elect [ ] not to enforce ... [the] guarantee...." The court also found that the Kellys' "suggestions ... that ... [New England's new owners] might not have honored these commitments is speculative and not persuasive."

We review de novo the district court's grant of summary judgment. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). "Summary judgment is appropriate if, in viewing the evidence in the light most favorable to the party opposing the motion, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id.

The release between the Kellys and de Martinis is governed by New York law. "Under New York law, a release is not voidable on grounds of economic duress unless it is shown that a threat was unlawfully made, causing an involuntary acceptance of the contract terms under circumstances where no alternative was available." Coral Gables Imported Motorcars v. Fiat Motors of N. America, Inc., 673 F.2d 1234, 1249 (11th Cir. 1982), modified, 680 F.2d 105, cert. denied sub nom. Rebhan v. Fiat Motors of N. America, Inc., 459 U.S. 1104 (1983); Stewart M. Muller Construction Co. v. New York Telephone Co., 40 N.Y.2d 955, 359 N.E.2d 328, 328, 390 N.Y.S.2d 817 (1976). In opposing de Martinis's summary judgment motion, the Kellys relied on conclusionary allegations that de Martinis coerced them into signing the release. They did not allege that de Martinis made any threats of the type which would act to invalidate the release under New York law. Accordingly, the district court did not err in granting de Martinis's summary judgment motion. See Berg, 794 F.2d at 459 (" [t]he party opposing summary judgment may not rest conclusionary allegations but must set forth facts showing that there is a genuine issue for trial").


Under Washington law, a defrauded purchaser is entitled to the benefit of his or her bargain, i.e., "the difference between actual value of the property at the time of sale and the value it would have had if the representations concerning it had been true." McInnis & Co. v. Western Tractor & Equip. Co., 67 Wash. 2d 965, 410 P.2d 908, 910 (1966); accord Tennant v. Lawton, 26 Wash. App. 701, 615 P.2d 1305, 1308 (1980). Additionally, " [w]here the benefit of the bargain will not make a plaintiff whole, he can recover in addition actual damages which follow as the natural and ordinary consequences of the wrong." Tennant, 615 P.2d at 1308; accord McInnis, 410 P.2d at 910.

The district court held that the Kellys could have entirely mitigated their damages by invoking the repurchase guarantees in their contract of sale with New England. We disagree. The record shows that the value of the coins fell with falling gold prices after the Kellys' purchase of the coins. The price New England would have paid the Kellys under the guarantee would not have accounted for this fall in value. Washington law places the risk of price fluctuations on the defrauding party. McInnis, 410 P.2d at 910 (damages are fixed "at the time of sale"); accord Tennant, 615 P.2d at 1308.

Moreover, the Kellys would also be entitled to any reasonable incidental damages they might have incurred as a result of the fraud. Tennant, 615 P.2d at 1308. There are indications in the record that the Kellys suffered incidental damages. For example, it appears that the Kellys engaged certain experts in any attempt to determine whether the coins were accurately graded. The repurchase guarantee also would not appear to account for these damages.

We conclude that the district court erred in holding that the Kellys' damages would have been entirely mitigated had they invoked the guarantee. Accordingly, we remand the Kellys' claim against New England to the district court. The judgment in favor of de Martinis is affirmed. Each party to bear its own costs.


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3