Joyce M. Rankine; Lawrence S. Stanton v. DOES, 1-10, inclusive

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOYCE M. RANKINE; LAWRENCE S.
STANTON,
Plaintiffs-counter-defendants
- Appellees,
v.
DOES, 1-10, inclusive,
Defendant,
And
ROLLER BEARING COMPANY OF
AMERICA, INC.,
Defendant-counter-claimant -
Appellant.
No. 13-56917
D.C. No. 3:12-cv-02065-MMA-
BLM
MEMORANDUM*
Appeal from the United States District Court
for the Southern District of California
Michael M. Anello, District Judge, Presiding
Argued and Submitted December 11, 2015
Pasadena, California
FILED
DEC 30 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Before: GOULD and BERZON, Circuit Judges and ZOUHARY,** District Judge.
As part of its purchase of All Power, Inc. through a Stock Purchase
Agreement, Appellant Roller Bearing Company of America, Inc. (“RBC”)
executed promissory notes in favor of Baxter Rankine and Lawrence Stanton.
When the notes came due, RBC refused to pay, claiming that it was entitled to
set-off rights under a provision in the notes. Rankine and Stanton sued to recover
the amount owed. RBC counterclaimed, alleging that Rankine and Stanton had
breached the Stock Purchase Agreement by (1) failing to convey intellectual
property assets that had allegedly been misappropriated by some of All Power’s
“Key Employees,” and (2) failing to disclose that some of All Power’s federal
Parts Manufacturer Approvals (“PMAs”) were based on “technical assist letters”
that were provided by the Boeing Company and potentially subject to licensing
fees. The district court granted summary judgment to Rankine and Stanton on all
claims and awarded attorney’s fees and costs. We affirm.
1. The district court correctly held that RBC had waived any claim to set-off
rights under the notes. While RBC did, contrary to the district court’s assertion,
introduce extrinsic evidence in support of its argument that it had waived only
** The Honorable Jack Zouhary, District Judge for the U.S. District
Court for the Northern District of Ohio, sitting by designation.
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certain, limited claims, under California law such evidence is only relevant and
admissible to the extent that, in light of the proffered evidence, the contract
language is “reasonably susceptible” to the interpretation urged. See Wolf v. Walt
Disney Pictures & Television, 162 Cal. App. 4th 1107, 1126–27 (2008). Here,
under an amendment to the promissory notes, RBC agreed to waive set-off claims
“of any kind or nature.” RBC’s proffered evidence went to its General Counsel’s
subjective intent at the time of the amendment. RBC did not offer any extrinsic
evidence providing a basis for interpreting the actual language agreed upon as
reasonably susceptible to the limited construction RBC would give it. We
therefore conclude that the clear language of the amended notes must be applied as
written.
2. The district court correctly granted summary judgment to Rankine and
Stanton on RBC’s counterclaim premised on a theory of “Key Employee”
misconduct. As the district court explained, RBC presented no evidence in support
of this claim. Its only basis was the deposition testimony of an RBC employee
who opined that former All Power employees would not have been able to start a
competing business, years after the sale, without proprietary information. This
unsupported speculation cannot raise an issue of triable fact sufficient to survive
summary judgment. See Fed. R. Civ. P. 56(a).
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3. The district court declined to consider RBC’s PMA-based counterclaim
on the ground that it had been raised for the first time at summary judgment. We
need not decide whether the district court was correct to do so, because RBC failed
to raise a triable issue of material fact on this issue. RBC argues that Rankine and
Stanton breached the Stock Purchase Agreement by falsely representing that All
Power owned all necessary intellectual property assets, whereas in fact many of All
Power’s PMAs were secured through the use of “technical assist letters” owned by
Boeing. But the Stock Purchase Agreement’s definition of intellectual property
assets does not cover the Boeing technical assist letters about which RBC claims to
have been unaware. So, even if Rankine and Stanton had failed to disclose this
fact, it would not have constituted a breach of the agreement.
4. The district court did not abuse its discretion in awarding attorney’s fees
and contractual costs pursuant to the promissory notes and the Stock Purchase
Agreement. See Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1011 (9th Cir.
2004). The district court’s decision was based on a reasonable construction of the
relevant provisions.
AFFIRMED.
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