Unpublished Disposition, 878 F.2d 385 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 878 F.2d 385 (9th Cir. 1989)

FIDELITY RISK MANAGEMENT SERVICES, INC., Plaintiff-Appellee,v.AMERICAN HOME ASSURANCE COMPANY, American InternationalGroup, Inc., A.I.G. Consultants, Inc.,Defendants-Appellants.

No. 88-2507.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 5, 1989.Decided June 23, 1989.

Before GOODWIN, Chief Judge, HUG and TANG, Circuit Judges.


In this diversity action, American Home Assurance Company ("American Home") appeals the district court's remitted judgment, entered after a jury returned a verdict against American Home and awarded damages to Fidelity Risk Management, Inc. ("Fidelity Risk") under breach of contract, fraud, unfair trade practices, promissory estoppel, and unjust enrichment theories.

The jury awarded the following damages:

breach of contract: $202,000 promissory estoppel: $25,000 fraud: $32,000 punitive damages for fraud: $115,000 unfair trade practices: $25,000 unjust enrichment: $3,500 -------- Total: $402,500

American Home moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The district court denied the motion on the condition that Fidelity Risk accept a remittitur of the $25,000 in damages awarded for promissory estoppel, the $115,000 in punitive damages, and a reduction in damages for breach of contract to $89,341. After the remittitur was accepted and the district judge trebled the jury's unfair trade practices award, judgment was entered for damages in the amount of $199,841, plus $110,422.80 in attorneys' fees and $7,175.58 in costs. We affirm.

American Home's main contention on appeal is that the district court erred in concluding that the contract at issue was an incomplete and ambiguous document and that resort to extrinsic evidence to prove the intent of the parties was therefore permissible. According to American Home, its written contract with Fidelity Risk was a complete statement of the parties' obligations, and, since American Home did not violate any of that contract's express provisions, the district court should have found that no breach occurred as a matter of law. We disagree.

The document that constitutes the American Home's contract with Fidelity Risk is a three-page letter proposal. It contains no express integration clause. Nor does it include anything but the most basic obligations of the parties. Finally, there is no evidence that the terms it reflects were the product of extensive, detailed negotiations. In these circumstances, it was not error for the district court to permit the admission of extrinsic evidence tending to support the existence of consistent, additional terms. See MPM Hawaiian, Inc. v. World Square, 666 P.2d 622, 627 (Haw.Ct.App.1983) (listing factors bearing on integration question).

Nor was it error for the district judge to conclude that several of the contract's express terms were, themselves, ambiguous. Although the contract obligated American Home to provide Fidelity Risk with business worth $200,000 throughout the contract year, it was silent as to how and when this work was to be assigned. Similarly, whether Fidelity Risk was required to maintain errors and omissions insurance from the moment it opened its doors cannot definitively be established by resort to the relevant contract language. Given the ambiguity in these contract provisions, both parties' interpretations were defensible. The dispute was therefore properly left to the jury. See State Farm Mut. Auto. Ins. v. Fernandez, 767 F.2d 1299, 1301 (9th Cir. 1985) (ambiguity raises a question of fact).

American Home next argues that the district court erred in denying its motions for directed verdict and JNOV on the breach of contract claim. When assessing the district court's resolution of these motions, the evidence must be reviewed in the light most favorable to the nonmoving party and all reasonable inferences must be drawn in favor of that party. See Peterson v. Kennedy, 771 F.2d 1244, 1252 (9th Cir. 1985) (JNOV), cert. denied, 475 U.S. 1122 (1986); West America Corp. v. Vaughan-Bassett Furniture Co., 765 F.2d 932, 934 (9th Cir. 1985) (directed verdict). If the evidence reasonably could support more than one conclusion, neither directed verdict nor JNOV is proper. See Peterson, 771 F.2d at 1252; West America Corp., 765 F.2d at 934.

Having determined that the admission of extrinsic evidence in this case was warranted, we have little difficulty concluding that the evidence was sufficient to support the jury's breach of contract verdict. Testimony at trial indicated that the primary purpose of the American Home's contract with Fidelity Risk was to provide American Home with two loss control consultants working full time on its Hawaiian accounts. Indeed, according to Mr. Lum, the $200,000 figure was based on two consultants working 40-hour weeks at $50 per hour for 50 weeks. Given this testimony, the jury could have concluded that American Home was obligated under the contract not only to provide a sufficient number of accounts, but also to provide them in such a manner that Fidelity Risk's two loss control consultants would be continuously employed. This interpretation of the contract is further strengthened by the fact that, once the contract was signed, American Home almost immediately transferred to Fidelity Risk accounts sufficient to generate $200,000 in billables over the course of the year. Thus, the evidence introduced at trial supports the conclusion that, when American Home took accounts away and failed to supply replacement accounts,1  it made reaching the $200,000 goal impossible for Fidelity Risk and therefore breached the contract.2 

In addition to damages for breach of contract, the jury awarded Fidelity Risk $32,000 based upon its finding that American Home committed fraud in its dealings with Fidelity Risk. American Home urges that this award was improper because unfulfilled promises regarding future events are not actionable as fraud in Hawaii. American Home further contends that the jury's fraud verdict is impermissibly duplicative of its breach of contract verdict.

Relying on Stahl v. Balsara, 587 P.2d 1210 (Haw.1978), American Home asserts that a fraud action can never be premised on unfulfilled promises regarding future events. American Home's reliance on Stahl, however, is misplaced. Although the Hawaiian Supreme Court did hold in Stahl that promises made by a fortuneteller could not support an action for fraud, id. at 1214, there is no indication in the court's decision that it intended to extend its ruling beyond the particular facts of that case and foreclose all fraud actions based upon broken promises. Indeed, this conclusion has already been reached by at least one Hawaiian court. See Eastern Star, Inc. v. Union Bldg. Materials Corp., 712 P.2d 1148, 1159 (Haw.Ct.App.1985) (noting that, even in the wake of Stahl, "a promise made without the present intent to fulfill the promise is actionable as fraud" (citation omitted)). Thus, we conclude that Fidelity Risk's fraud claim is actionable under Hawaiian law.

American Home also attacks the jury's fraud verdict on the ground that the $32,000 award is impermissibly duplicative of its breach of contract verdict. However, American Home has not offered, and our research has not disclosed, any indication that the Hawaiian courts disagree with the general principle that "the defrauded party to the contract ... has the right to affirm it, retain its benefits, and also recover damages for the fraud." 37 C.J.S. Fraud Sec. 65 (1943). Thus, a party "may sue to enforce [its] rights under the contract and at the same time maintain an action of deceit." Id. (footnote omitted); see also 28 C.J.S. Election of Remedies, Sec. 6 (1941) ("there is no inconsistency between different remedies all of which are based on the affirmance ... of the contract"); cf. Eastern Star, 712 P.2d at 1153, 1159 (permitting without comment simultaneous actions for fraud in the inducement, breach of contract, and violation of Haw.Rev.Stat. 480-2).

Although Fidelity Risk can collect only one satisfaction for the damages it sustained as a result of American Home's misconduct, see 50 C.J.S. Judgments, Sec. 676 (1947), there is no indication in the present case that any improper duplication occurred. As remitted, Fidelity Risk recovered in contract damages only its guaranteed income, lost when American Home breached their agreement. There was, however, ample evidence of other injuries that Fidelity Risk sustained due to American Home's fraudulent misrepresentations. For instance, evidence exists to support the conclusion that American Home's inducements led Mr. Lum to borrow funds for and invest personal assets in Fidelity Risk which were subsequently lost. The district judge concluded that the range of additional damages supported by the evidence was between $2,000 and $40,000. The jury's award of $32,000 is therefore not so "grossly excessive" that it must be disturbed on appeal. See Chalmers v. City of Los Angeles, 762 F.2d 753, 760 (9th Cir. 1985).

Under Hawaiian law, " [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce" are prohibiteD. Haw. Rev.Stat. Sec. 480-2 (1985). In the instant case, the jury concluded that American Home had violated section 480-2 and awarded Fidelity Risk $25,000 in damages. American Home argues that this award cannot stand because the district court's unfair trade practices instruction was impermissibly vague and because the jury was not informed that its damage award would be trebled by the court.3  We review the district court's formulation of jury instructions for abuse of discretion. See Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1423 (9th Cir. 1986). In doing so, we look to the "charge as a whole to determine whether the instruction is misleading or incorrectly states the law to the prejudice of the objecting party." Maddox v. City of Los Angeles, 792 F.2d 1408, 1412 (9th Cir. 1986) (citations omitted).

Far from incorrectly stating the law, the district court's unfair trade practices instruction reproduces in an essentially verbatim fashion the definition of unfair and deceptive practices that has been developed by the Hawaiian courts. See, e.g., T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 636 (9th Cir. 1987); Eastern Star, Inc., 712 P.2d at 1154; see also Cunha, 804 F.2d at 1433 (noting broad construction given section 480-2). The district court's reliance on this instruction was therefore not an abuse of discretion.

American Home's argument that the jury should have been instructed that its unfair trade practices award would be trebled must also fail. The Hawaiian Legislature has expressly stated that, when interpreting chapter 480 of the Hawaiian Code, courts should look to the federal antitrust laws for guidance. See Haw.Rev.Stat. Sec. 480-3 (1985). The Ninth Circuit has held that it is inappropriate to instruct an antitrust jury that its award will be trebled. See Noble v. McClatchy Newspapers, 533 F.2d 1081, 1090-91 (9th Cir. 1975), vacated on other grounds, 433 U.S. 904 (1977); see also CVD, Inc. v. Raytheon Co., 769 F.2d 842, 859-60 (1st Cir. 1985), cert. denied, 475 U.S. 1016 (1986). It was therefore not an abuse of discretion to refuse American Home's treble damage instruction.4 

We have reviewed the remainder of American Home's claims and find them to be without merit.



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


The jury also could have determined from the evidence that Fidelity Risk's lack of errors and omissions insurance was merely a pretext for American Home's actions


American Home also contends that the district court should have granted a new trial rather than simply remitting the verdict. This decision is reviewed for abuse of discretion. See Seymour v. Summa Vista Cinema, Inc., 809 F.2d 1385, 1387 (9th Cir. 1987), modified on other grounds, 817 F.2d 609 (9th Cir. 1987). Although the district judge, after a careful and thorough review of the evidence, concluded that the jury's damage award was excessive, he did not find nor is there any indication that the jury's finding of liability was tainted. See id. (" [t]he fact that a jury may have been outraged by the defendant's conduct to the point of awarding excessive damages does not prove that its decision on liability was flawed"). American Home has pointed to nothing besides the excessive verdict to prove that the jury acted improperly. Thus, the district judge did not abuse his discretion by refusing to grant a new trial


American Home also claims that the jury's unfair trade practices verdict is impermissibly duplicative of its breach of contract verdict. The Hawaiian courts, however, have expressly held that a party may maintain simultaneous actions for common law fraud and violation of section 480-2. See Eastern Star, 712 P.2d at 1159 ("neither the statute nor its history expresses any legislative intent to discard the common law fraud action and remedy"). Thus, even if American Home is right in its assertion that simultaneous actions for breach of contract and violation of section 480-2 are impermissible, the jury's unfair trade practices award is not improperly duplicative for the reasons discussed in section III, supra


Kaeo v. Davis, 719 P.2d 387 (Haw.1986), does not change this analysis. Kaeo deals only with the issue of apportioning liability among tortfeasors; it says nothing about the propriety of informing a jury that a punitive award will be imposed by the court