Global Btg LLC v. National Air Cargo, Inc.

FILED
NOT FOR PUBLICATION
MAY 13 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

Global BTG LLC, a Nevada limited No. 14-55574
liability company with a principal place of
business in California, D.C. No. 2:11-cv-01657-JGB-JCG

Plaintiff-counter-defendant -
Appellee, MEMORANDUM*

National Air Cargo, Inc., a New York
corporation registered to do business in
California,

Defendant-counter-claimant -
Appellant.

Appeal from the United States District Court
for the Central District of California
Jesus G. Bernal, District Judge, Presiding

Argued and Submitted April 8, 2016
Pasadena, California

* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

** The Honorable David Bryan Sentelle, Senior Circuit Judge for the U.S.
Court of Appeals for the District of Columbia Circuit, sitting by designation.
Before: FARRIS, SENTELLE**, and M. SMITH, Circuit Judges.

National Air Cargo, Inc. (“National”) appeals from a judgment based on a jury

verdict awarding $8 million to Plaintiff-Appellee Global BTG LLC (“Global”), on its

claim that National breached an exclusive letter of intent (the LOI) to finance several

commercial airplanes.

As the facts and procedural history are familiar to the parties, we do not recite

them here except as necessary to explain our disposition. We note at the outset that as

the district court properly observed, under the parties’ choice of law provision in the

LOI, the law of the State of New York governs.

1. We review partial grants of summary judgment decisions de novo.

Balvage v. Ryderwood Improvement & Serv. Ass’n, 642 F.3d 765, 775 (9th Cir. 2011).

The LOI at issue does not contain an exclusivity clause, and such an absence does not

make a contract non-exclusive under New York law. For instance, the court in

Headwell v. Sandler, 46 A.D.2d 584, 587 (N.Y. App. Div. 1975), found that an

agreement to sell the plaintiff the rights to eleven transceiver licenses was ambiguous

as to exclusivity — even though it did not contain an exclusivity provision — because

the agreement could be interpreted to confer an exclusive right to specific transceivers

in the country. See also, e.g., Dontech, Inc. v. York Int’l Corp., No. 96 Civ. 4264

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(JSM), 1998 WL 171455, *1 (S.D.N.Y. Apr. 14, 1998); Wyndham Co. v. Wyndham

Hotel Co., 596 N.Y.S.2d 655, 661 (N.Y. Sup. Ct. 1992).

National contends that silence amounts to no contractual right to exclusivity in

this case. We disagree. Despite the silence, the terms of the LOI could have created

an exclusive relationship. Similar to the agreement in Headwell, the LOI indicates

that National might purchase, lease, or finance through Global the eight specific

aircraft at issue. This specificity indicates that the LOI may have been exclusive

because two finance groups cannot purchase and leaseback the same aircraft.

Gas Natural Inc. v. Iberdola S.A., 33 F. Supp. 3d 373 (S.D.N.Y 2014), does not

resolve the matter in National’s favor. In Gas Natural, the parties made a “conscious

decision not to include an exclusivity provision in the LOI.” Id. at 375. The district

court dismissed, ruling that the silent contract was not exclusive as a matter of law.

Id. at 381, 386. The facts in Gas Natural are not parallel to the dealings between

Global and National. The rejected provision in Gas Natural was for exclusivity; in

this case, Global rejected a provision for non-exclusivity. Unlike in Gas Natural,

rejecting the non-exclusivity provision in this case does not undermine Global’s

contention that the LOI was intended as an exclusive agreement by “default.”

The question of exclusivity was properly left to the jury given the extrinsic

evidence the parties presented to the court. Both sides provided extrinsic evidence

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regarding the need for exclusivity (i.e., from Global’s perspective), or the lack thereof

(i.e., from National’s perspective). The parties’ evidence conflicted, creating a

genuine issue of material fact. Therefore, the district court did not err in denying

National’s motion for summary judgment.

2. We review the district court’s order denying National judgment as a

matter of law de novo. See Byrd v. Maricopa Cty. Sheriff’s Dep’t, 629 F.3d 1135,

1138 (9th Cir. 2011) (en banc). Judgment as a matter of law is properly granted only

“if the evidence, construed in the light most favorable to the nonmoving party, permits

only one reasonable conclusion, and that conclusion is contrary to the jury’s verdict.”

Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1243 (9th Cir. 2014). We must

uphold a jury’s verdict “if it is supported by substantial evidence that is adequate to

support the jury’s findings, even if contrary findings are also possible.” Id. And where

“there is substantial evidence to support the verdict,” we must affirm “both the verdict

and the denial of the motion” for judgment as a matter of law. Harper v. City of Los

Angeles, 533 F.3d 1010, 1021 n.9 (9th Cir. 2008).

We review the district court’s denial of National’s motion for a new trial for

abuse of discretion. See Molski v. M.J. Cable, Inc., 481 F.3d 724, 728 (9th Cir. 2007).

“The district court’s denial of the motion for a new trial is reversible only if the record

contains no evidence in support of the verdict.” Id. Additionally, “[j]ury instructions

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are reviewed for an abuse of discretion.” Browning v. United States, 567 F.3d 1038,

1041 (9th Cir. 2009). “[S]o long as the jury instructions set forth the essential

elements that the plaintiff must prove, a district court does not abuse its discretion in

declining to give an instruction explicitly addressing [a specific theory].” Id. at

1039-40.

Under New York law, it was Global’s burden to prove the following elements

to establish its breach of contract claim: (a) the existence of a contract between

Global and National; (b) National’s breach of that contract; and (c) damages suffered

by Global as a result of the breach. See Bear Stearns Inv. Prods., Inc. v. Hitachi Auto.

Prods. (USA), Inc., 401 B.R. 598, 615 (S.D.N.Y. 2009). Jury Instruction 24 tracked

the essential elements of a breach of contract claim under New York law. E.R. at 743.

Accordingly, the district court did not abuse its discretion in rejecting a more specific

“exclusivity” instruction.

Substantial evidence supported the jury’s verdict. The jury saw and heard

extensive evidence on why the LOI made no sense to Global without exclusivity;

context about the negotiation of the LOI which included the removal of a

non-exclusivity provision; and testimony about industry norms. The jury reasonably

could have found that both parties intended for an exclusive LOI. Accordingly,

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National is not entitled to judgment as a matter of law and reversal of the jury’s

verdict (or a new trial) is not warranted.

3. As to damages, we review de novo whether jury instructions misstate the

law. Dream Games of Ariz., Inc. v. PC Onsite, 561 F.3d 983, 988 (9th Cir. 2009).

And we review awards of compensatory damages for “substantial evidence.” Harper,

533 F.3d at 1028.

National contends that Global sought to avoid the heightened burden of proof

that New York law imposes upon entities seeking damages for lost profits by

characterizing its damages as “benefit of the bargain,” rather than “lost profits”

damages. Therefore, National argues, the district court improperly instructed the jury

on Global’s damages.

Because the LOI called for the sale and lease of commercial goods, the New

York Uniform Commercial Code applies. See Songbird Jet Ltd., Inc. v. Amax, Inc.,

581 F. Supp. 912, 921 (S.D.N.Y. 1984). For its breach of contract claim, Global

sought what it would have received had the contract been performed — that is,

“benefit of the bargain” damages. Under the New York UCC, a plaintiff can seek

“benefit of the bargain” damages. N.Y. U.C.C. § 2-A-528(2). Accordingly, the district

court did not err in instructing the jury on benefit of the bargain damages rather than

on lost profits.

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National also argues that the jury engaged in improper speculation when it

awarded Global $8 million in damages. In reviewing the jury’s damages award, we

“must not weigh the evidence,” Harper, 533 F.3d at 1021, and, instead, we “must

uphold the jury’s finding of the amount of damages unless the amount is grossly

excessive or monstrous, clearly not supported by the evidence, or only based on

speculation or guesswork,” Del Monte Dunes at Monterey, Ltd. v. City of Monterey,

95 F.3d 1422, 1435 (9th Cir. 1996).

Where damages are based on claims governed by New York law, a federal court

applies the standard of review provided by New York’s Civil Practice Law and Rules

(“C.P.L.R.”) § 5501(c). Uni-Rty Corp. v. Guangdong Bldg., Inc., No.

95-cv-09432-GBD, 2012 WL 1901200, at *6 (S.D.N.Y. May 25, 2012). The C.P.L.R.

provides that “‘[i]n reviewing a money judgment . . . [the court] shall determine that

an award is excessive or inadequate if it deviates materially from what would be

reasonable compensation.’” Id. (quoting C.P.L.R. § 5501(c)).

The jury damage award was supported by substantial evidence that Global

could and would have obtained financing and the benefit of the bargain would have

been substantial. For instance, if National and Global had continued the relationship

as a finance lease, the jury heard evidence from both parties’ experts that Global

would have earned $1.9 million per aircraft or approximately $8 million.

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Additionally, the jury heard evidence supporting an $8 million damages award under

a broker-dealer scenario. In other words, after reneging on the LOI with Global,

National still acquired several aircraft through Goldman Sachs as a broker. National

paid Goldman Sachs a 2.5% broker fee on the $332.9 million in financing that

Goldman Sachs secured — which amounted to approximately $8 million.

Accordingly, substantial evidence supported the jury’s verdict, and the jury did not

improperly speculate when reaching the damages award.

For the foregoing reasons, we affirm the district court’s ruling on summary

judgment and reversal of the jury’s verdict (or a new trial) is not warranted.

AFFIRMED.