FILED
NOT FOR PUBLICATION
DEC 11 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BOFI FEDERAL BANK, a federally No. 16-35006
chartered banking institution,
D.C. No. 2:14-cv-00484-BJR
Plaintiff-Appellant,
v. MEMORANDUM*
ADVANCE FUNDING LLC; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Washington
Barbara Jacobs Rothstein, District Judge, Presiding
Submitted December 7, 2017**
Seattle, Washington
Before: HAWKINS, McKEOWN, and CHRISTEN, Circuit Judges.
Sheena Venzant entered into an agreement with BofI Federal Bank (the BofI
Agreement) to assign twenty-five annual lottery payments in exchange for a lump
sum. Under Washington law, such an assignment has to be judicially approved.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
RCW § 67.70.100. Before it was, Venzant repudiated her contract with BofI and
entered into a similar arrangement with Advance Funding. Advance petitioned and
received judicial approval for Venzant to assign her annual prize payments to one
of Advance’s business associates. BofI sued Advance and its business associates,
asserting tortious interference with contract and unjust enrichment. The district
court granted summary judgment to Advance, holding that the BofI Agreement
was contrary to public policy and therefore unenforceable. BofI timely appeals.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse. McKown v.
Simon Prop. Grp. Inc., 689 F.3d 1086, 1091 (9th Cir. 2012).
In this diversity action, we are bound by decisions of the Washington
Supreme Court. Id. “[I]n the absence of such a decision,” our task is to “predict
how the highest state court would decide the issue using intermediate appellate
court decisions, among other sources of authority.” Id. “While [Washington]
recognize[s] an overarching freedom to contract, provisions are unenforceable
where they are prohibited by statute.” Jordan v. Nationstar Mortg., LLC, 185
Wash 2d. 876, 883 (2016). Moreover, “[a] contract that is contrary to the terms
and policy of an express legislative enactment is illegal and unenforceable.”
Tanner Elec. Coop. v. Puget Sound Power & Light Co., 128 Wash. 2d 656, 669
(1996) (citing Vedder v. Spellman, 78 Wash. 2d 834, 837 (1971)).
2
Washington courts have declined to enforce contracts where the parties have
flouted a statutory requirement or colluded to evade their statutory duties, see, e.g.,
Hammack v. Hammack, 114 Wash. App. 805 (2003); Evans v. Luster, 84 Wash.
App. 447 (1996); Kennedy v. Roda, 41 Wash. App. 177 (1985), but the BofI
Agreement did not transgress “the terms . . . of an express legislative enactment,”
Tanner Elec. Coop., 128 Wash. 2d at 669. In fact, by making judicial approval of
the assignment a condition precedent to obligations under the contract, the BofI
Agreement required compliance with RCW § 67.70.100.1
Nor was the BofI Agreement hostile to the policy underlying RCW
§ 67.70.100. Washington sought, through the statute, to “extend its parens patriae
protection to lottery winners in order to insulate them from their own human
frailties and the possible excesses to which they might be subjected.” Converse v.
Lottery Comm’n, 56 Wash. App. 431, 436 (1989). The legislature’s fear was that
1
The unsatisfied condition precedent would have prevented BofI or Venzant
from demanding immediate performance, but it did not render the contract invalid
or otherwise incapable of supporting a claim for tortious interference. See, e.g.,
Walter Implement, Inc. v. Focht, 107 Wash. 2d 553, 556–57 (1987) (“A condition
precedent is an event occurring subsequent to the making of a valid contract which
must exist or occur before there is a right to immediate performance.”); BG Grp.,
PLC v. Republic of Arg., 134 S. Ct. 1198, 1207 (2014) (condition precedent
determines “when the contractual duty . . . arises, not whether there is a contractual
duty . . . at all”) (citing 13 RICHARD A. LORD, WILLISTON ON CONTRACTS §§ 38:7,
38:4 (4th ed. 2013)).
3
lottery winners might “put[] themselves into debt by assigning excessive amounts
of their winnings to creditors.” Id. Enforcing the BofI Agreement would not
defeat the legislative intent behind RCW § 67.70.100.
Advance suggests that were the BofI Agreement to be deemed enforceable, a
factoring company could string along a lottery winner “while it ‘shopped’ the deal
or waited for insurance to activate.” According to Advance, such an outcome
offends Washington’s state policy by “favoring the interest of a factoring company
over an individual lottery winner.” This contention is wide of the mark because
BofI and Venzant were equally bound to their contract. See Rekhter v. Dep’t of
Soc. & Health Servs., 180 Wash. 2d 102, 112 (2014) (“Under Washington law,
there is in every contract an implied duty of good faith and fair dealing that
obligates the parties to cooperate with each other so that each may obtain the full
benefit of performance.” (alteration and quotation marks omitted)); CHG Int’l, Inc.
v. Robin Lee, Inc., 35 Wash. App. 512, 515 (1983) (“Each party has an affirmative
good faith obligation to perform conditions precedent to a contract and cannot be
excused from performance of the contract by his own misconduct.”). The factoring
company in Advance’s hypothetical would not be free to relieve itself, expressly or
through artifice, of the obligations it owes to the lottery winner, and BofI did not
try to do so in this case.
4
Because the validly formed BofI Agreement violated neither the letter nor
the spirit of the Washington statute, it was not unenforceable as contrary to public
policy. We therefore reverse the district court’s order granting summary judgment
in favor of Advance and remand for proceedings consistent with this disposition.
REVERSED AND REMANDED.
5