NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 7 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CENTRAL FREIGHT LINES, INC., a No. 20-35263
Texas corporation,
D.C. No. 2:17-cv-00814-JLR
Plaintiff-Appellee,
v. MEMORANDUM*
AMAZON FULFILLMENT SERVICES, a
Delaware corporation,
Defendant-Appellant.
CENTRAL FREIGHT LINES, INC., a No. 20-35276
Texas corporation,
D.C. No. 2:17-cv-00814-JLR
Plaintiff-Appellant,
v.
AMAZON FULFILLMENT SERVICES, a
Delaware corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, District Judge, Presiding
Argued and Submitted June 11, 2021
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Seattle, Washington
Before: GOULD, CLIFTON, and MILLER, Circuit Judges.
In this diversity action, Amazon Fulfillment Services appeals aspects of the
district court’s summary-judgment order in favor of plaintiff Central Freight Lines,
Inc.; a jury verdict also in favor of Central Freight; and post-trial orders denying
Amazon’s motions for judgment as a matter of law or for a new trial and awarding
Central Freight prejudgment interest. Central Freight cross-appeals the district
court’s selection of the accrual date for the prejudgment interest award and its
denial of Central Freight’s request for attorney’s fees. We have jurisdiction under
28 U.S.C. § 1291, and we affirm in part, reverse in part, vacate in part, and remand
for further proceedings.
1. Reviewing the district court’s grant of summary judgment de novo,
see Hrdlicka v. Reniff, 631 F.3d 1044, 1048 (9th Cir. 2011), we conclude that the
district court erred when it ruled that there was no genuine dispute of material fact
that the parties orally modified their agreement on January 16, 2014 to allow
Central Freight to charge its “spot quote” rates for certain shipments without
Amazon’s preapproval. To form a contract, the parties must “mutual[ly] assent to
the same bargain at the same time.” Burnett v. Pagliacci Pizza, Inc., 470 P.3d 486,
491 (Wash. 2020) (quoting Yakima Cnty. (W. Valley) Fire Prot. Dist. No. 12 v.
City of Yakima, 858 P.2d 245, 255 (Wash. 1993)). The district court primarily
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relied on three categories of evidence, but when the evidence is viewed in the light
most favorable to Amazon, see Hrdlicka, 631 F.3d at 1048, genuine issues of fact
remain as to whether the parties modified their agreement on January 16, 2014 and
whether they shared an understanding of its terms.
First, the district court referenced a January 2014 email exchange in which
Central Freight executive Tom Botsios described his belief that Central Freight and
Amazon had reached a similar oral modification in 2011. The district court took
Amazon employee Christian Piller’s response—that the parties should “get an
addendum to the contract to include this agreement”—as an unambiguous
manifestation of assent to the modification on that date.
A jury, however, could reasonably have found otherwise. Before Botsios
sent the addendum, Piller cautioned that he would “have [Amazon] Legal review
once [Botsios] sen[t] the document,” adding that “there may be some standard
back-and-forth.” After Botsios sent the addendum, Piller again noted that he would
“discuss with Legal and follow up.” The next month, in response to an email from
an Amazon employee regarding a shipment involving Central Freight, Piller stated
that the addendum had “not [been] executed by Amazon, only sent to Amazon for
review.” The fact that Amazon never signed the addendum is material evidence
that it did not assent to a separate, contemporaneous modification. See
Roethemeyer v. Milton, 33 P.2d 99, 101–02 (Wash. 1934) (“The failure to reject an
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offer is not equivalent to assent” because “[s]ilence is not assent, unless there is a
duty to speak.”).
Second, the district court relied on Piller’s deposition testimony in which he
said that he “told Tom [Botsios] to spot quote eight-pallet-plus shipments.” The
district court took this and similar testimony as an admission that the parties had
agreed to the modification. But as Central Freight concedes, the term “spot quote”
is susceptible to two meanings. In normal industry parlance, a spot quote is an ad
hoc offer by a carrier that a shipper may accept, reject, or further negotiate. But
here, Central Freight says the parties used the term to mean a rate generated by
CFL’s “spot quote computer pricing program” that Amazon could not later contest.
A jury could reasonably interpret Piller’s testimony and communications as
intending to convey the industry-standard meaning, such that he was merely
inviting Central Freight to make future offers rather than agreeing to modify the
agreement’s pricing structure. See Donatelli v. D.R. Strong Consulting Eng’rs,
Inc., 312 P.3d 620, 624 (Wash. 2013) (“Contract interpretation is normally a
question of fact for the fact-finder.” (quoting Spradlin Rock Prods., Inc. v. Public
Util. Dist. No. 1 of Grays Harbor Cnty., 266 P.3d 229, 235 (Wash. Ct. App.
2011))). And under that interpretation, the parties at most would have agreed to
negotiate future rates for future shipments—forming a mere “agreement to agree,”
which is “unenforceable in Washington.” See Keystone Land & Dev. Co. v. Xerox
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Corp., 94 P.3d 945, 948 (Wash. 2004).
Third, the district court relied on the parties’ course of performance—
Central Freight had billed, and Amazon had paid, “hundreds, if not thousands,” of
invoices at Central Freight’s spot quote rates. Amazon paid those invoices even
though its invoice processing system flagged most if not all of them as “off-
manifest,” meaning that Amazon controllers had to approve payment for them.
Course of performance is relevant to contract interpretation. See Wash. Rev.
Code § 62A.1-303(d). And the evidence here might support inferences in Central
Freight’s favor. See Spradlin Rock Prods., 266 P.3d at 238–39. But we are unable
to say that the parties’ course of performance proves for summary-judgment
purposes that they agreed to modify their agreement in the manner that Central
Freight advocates, much less that they did so on January 16, 2014. See Donatelli,
312 P.3d at 624 n.1 (“The interpretation of an oral contract is generally not
appropriate for summary judgment because [its] existence . . . and its terms usually
depend[] on the credibility of witnesses testifying to specific fact-based dealings
which, if believed, would establish a contract and the contract’s terms.” (quoting
Spradlin Rock Prods., 266 P.3d at 235)).
We express no view on the relative strength of the parties’ claims. For
present purposes, it suffices to say that a jury could find that the parties did not
have a meeting of the minds on January 16, 2014. See Burnett, 470 P.3d at 491.
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2. For similar reasons, we reverse the district court’s alternative
summary-judgment ruling that, to the extent the parties’ modification required
Central Freight to obtain Amazon’s preapproval of all spot quotes, Amazon waived
that requirement. See Jones v. Best, 950 P.2d 1, 6 (Wash. 1998) (“[W]aiver will not
be inferred from doubtful or ambiguous factors.”).
3. In the alternative, Central Freight asks us to affirm the district court’s
decision on alternative grounds, namely, promissory estoppel, ratification, and
substantial performance or lack of materiality. The district court did not address
those theories, and we decline to consider them in the first instance. See Planned
Parenthood of Greater Wash. & N. Idaho v. United States Dep’t of Health & Hum.
Servs., 946 F.3d 1100, 1110 (9th Cir. 2020).
4. The district court correctly granted summary judgment on Central
Freight’s claim seeking a declaration that “Amazon had no right [to] withhold
monies owed to Central Freight as a setoff.” Amazon does not argue on appeal that
the parties’ agreement allowed for setoff. Instead, it claims that all creditors have a
common-law right to withhold payments that they owe when the counterparty
owes them an equivalent sum. We disagree.
“The right of setoff . . . allows entities that owe each other money to apply
their mutual debts against each other, thereby avoiding ‘the absurdity of making A
pay B when B owes A.’” Citizens Bank of Md. v. Strumpf, 516 U.S. 16, 18 (1995)
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(quoting Studley v. Boylston Nat’l Bank, 229 U.S. 523, 528 (1913)). But mutual
debts do not extinguish one another “either automatically or by an election or other
action by one party; rather, the agreement of the parties or judicial action is
required.” 15 Williston on Contracts § 44:34 (4th ed. 2021). And when there are
mutual debts between a debtor and a creditor, “the debtor will not be excused from
[its] obligation to pay regardless of any breach of duty by the creditor,” even if
both debts are readily quantifiable. Id. That principle applies here.
Amazon points to Warren, Little & Lund, Inc. v. Max J. Kuney Co., 796 P.2d
1263 (Wash. 1990), but that case stands for the narrower proposition that a party
may bring a counterclaim for setoff using a contingent, unliquidated debt to
mitigate its liability for withholding funds that it owed under a separate agreement.
Id. at 1266. So while Amazon may maintain a counterclaim for setoff in this
litigation, it may not avoid potential liability for wrongfully withholding funds just
because Central Freight might owe it money for some other reason. See 15
Williston on Contracts § 44:35 (4th ed. 2021) (“[A] debtor violates its legal duty if
it fails to pay a debt when due even though the creditor owes the debtor a larger,
fully liquidated sum.”).
The district court’s setoff ruling also must stand even though, as Central
Freight concedes, that ruling included an incorrect finding of fact: that Amazon’s
setoff included charges that preceded the 18-month audit window. The error was
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harmless because the district court correctly held that Amazon had no right to
setoff. Whether some portion of the invoices fell outside the audit window does not
affect that broader conclusion.
5. Because we partially reverse the summary-judgment order, we vacate
the jury verdict and the post-trial orders predicated on it. We therefore do not reach
the parties’ arguments about those phases of the case.
All pending motions are denied as moot.
The parties shall bear their own costs.
AFFIRMED in part, REVERSED in part, VACATED in part, and
REMANDED.
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