Unpublished Disposition, 940 F.2d 669 (9th Cir. 1991)

No. 90-35753.

United States Court of Appeals, Ninth Circuit.

Before D.W. NELSON, NOONAN and THOMAS G. NELSON, Circuit Judges

MEMORANDUM^* 

In June 1986 Virginia and Jon Peterson of Billings, Montana bought a franchise from Blue Chip Cookies Franchises Corporation. Three years later they filed suit against Blue Chip and Matt Nader alleging both RICO and pendent tort claims arising from the original sale and subsequent franchise relationship. The district court granted summary judgment in favor of Blue Chip on the RICO claim. A jury trial was held on the state law tort claims. The jury found Blue Chip was not negligent, did not make negligent misrepresentations, and did not breach fiduciary duties or commit constructive fraud. The jury found Blue Chip had breached the implied covenant of good faith and fair dealing but awarded no damages to the Petersons. The Petersons argue the RICO claim should have gone to the jury and challenge the jury instructions on causation. We affirm.

1. Jury Instructions.

We give the district court wide latitude in tailoring jury instructions and will not reverse if an error in instructing the jury is harmless. Coursen v. A.H. Robins Co., 764 F.2d 1329, 1337 (9th Cir.), modified, 773 F.2d 1049 (9th Cir. 1985). Here the district court should not have given Instruction No. 25. That error, however, did not taint the jury's verdict on most of the claims submitted. The special verdict form shows the jury rejected most of the tort claims before reaching the causation stage. The only claim in which causation was even considered was Blue Chip's tortious breach of the implied covenant of good faith and fair dealing. Again, however, the error proves to be harmless. Since the verdict was entered the Supreme Court of Montana has held that in most cases parties to a contract cannot bring suit for tortious breaches of the implied covenant. Story v. City of Bozeman, 791 P.2d 767, 776 (Mont.1990). The Petersons do not fall within any of the exceptions noted in Story; therefore they did not prove a claim under Montana law.

2. RICO Claim.

In light of the jury verdict we do not reach the question of whether the Petersons met the continuity test set forth in H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989). The district court assumed the Petersons set forth viable predicate acts of mail and wire fraud. Both mail and wire fraud, however, require an underlying scheme or artifice devised with specific intent to defraud. Schreiber Distributing Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1399-1400 (9th Cir. 1986). The jury found Blue Chip had not engaged in any fraudulent scheme. The jury verdict makes it impossible for the Petersons to show Blue Chip engaged in racketeering activity. Any question of whether summary judgment was properly granted is rendered moot.

3. Other Issues.

The district court properly rejected the Petersons' motion for judgment notwithstanding the verdict as to Blue Chip's negligence. We also agree that the Petersons were not entitled to attorney fees under Montana law.

AFFIRMED.